Wilson Stalls Tax Cut Plan to Avert Defeat

Faced with a second embarrassing defeat in 10 days, Gov. Pete Wilson on Wednesday abruptly sidetracked his proposed $7.6-billion income tax cut plan and launched a search for Democratic votes.

Wilson Administration officials said the decision to delay a hearing by the Democratic-controlled Senate Revenue and Taxation Committee was strictly a tactical maneuver designed to avert a potentially fatal setback for the bill.

Sean Walsh, the governor’s spokesman, denied the notion that the governor’s enthusiasm for the 15% cut in personal and business income taxes starting April 15 had cooled. “We’re not backing down one bit,” he said.

The first defeat of the tax cut bill, a cornerstone of Wilson’s budding campaign for the Republican nomination for President, occurred May 8 at the hands of Democrats in the Assembly Revenue and Taxation Committee.

Senate GOP Leader Ken Maddy of Fresno said he was “ready to go” with the Senate version of the bill Wednesday even though, he conceded, it faced certain defeat in the committee. He said Wilson aides asked him to postpone the hearing.

“This gives our side more time to work the [Democratic] members,” Walsh said. He said scheduling conflicts had thwarted Administration lobbyists from meeting with Democrats.

Democrats in both houses have challenged the wisdom of enacting an income tax cut when the state is confronted with a budget gap of at least $2.5 billion on July 1. Other gloomier scenarios put the shortfall at $6 billion or more.

Instead of a tax cut, Democrats have called for spending any extra money on the higher prison costs resulting from the “three strikes” law and for rolling back fee increases levied on college students in previous state budgets.

Wilson, who angered conservatives when he and the Legislature enacted a record $7.5-billion tax increase in 1991, has sought to erase the stain by advancing himself in his White House bid as a tax cutter. Some Republicans in the Legislature have said privately that Wilson has been so busy running for President that he has not fought hard enough for his own income tax cut bill.

Wilson views the tax cut as a boost for the recovering California economy that will also help businesses stay competitive. Further, he has said the proposed cut is a pay-back for sacrifices businesses and individuals made during the long recession.