Checchi Vows to Push for Tax Credits, Employment

Corporate financial wizard Al Checchi outlined a package of tax credits Tuesday that he would offer to college students, working parents, new home buyers and senior citizens if he wins the Democratic primary and is elected governor.

After his speech to a group of moderate Democrats, the commercial wunderkind and political newcomer stumbled by misstating the state’s current tax structure.

Still, the speech introduced the former co-chairman of Northwest Airlines as a fiscal conservative Democrat who considers the prosperity of the business community to be a top priority for government.

“If the only thing government did was to stimulate full employment at a living wage, every one of our major social problems would be materially reduced,” he told about 100 members of the Democratic Leadership Council. “Simply stated, a private sector that creates good paying jobs is the most powerful instrument of public policy.”

The economic speech was the third of four major policy addresses that Checchi said he would give before the Democratic primary in June, where he faces off against Lt. Gov. Gray Davis and Rep. Jane Harman (D-Torrance).

It was also one of the most important for Checchi, who has staked his hopes for the governor’s office on the case that his business experience and financial wizardry makes him the best candidate.

Checchi outlined several broad challenges facing the state, including improvement of public schools, reduction of crime, inadequate roads and infrastructure and the need to preserve cities and the environment. The most significant change he proposed was his package of tax relief.

Regarding education, Checchi said he would provide a $1,000 tax credit for each student during the first two years of college or vocational training school.

He also suggested a $2,500 tax credit aimed at lower and lower-middle income taxpayers; a maximum $2,500 credit for senior citizens who receive in-home care and a one-time tax credit of $2,500 for first-time home buyers.

Checchi said he estimated that the entire package would cost state government about $450 million per year. He suggested that could be balanced by cutting waste out of the state bureaucracy or with surplus revenue generated by the improving economy.

Checchi’s error in describing state revenues came after his speech in a sometimes testy exchange with reporters about his housing plan.

The Democratic candidate said home ownership is out of reach for too many Californians. In explaining the problem, he said local governments are penalized for building homes over commercial properties because of problems in the state’s current tax structure.

But Checchi misstated the financing process by insisting that the state--not local government--keeps money from property tax revenue.

In fact, the California tax code requires all property tax revenue to go to cities, counties, agencies and schools. The share each receives is determined by the state.

“The property tax goes to Sacramento and it doesn’t all come back,” he insisted. “Next question.”

The episode was an example of the scrutiny Checchi faces as he stakes his campaign on the claim that a successful businessman can bring beneficial changes to California.

Several of his proposals for changing government are at odds with conventional political wisdom in Sacramento. Late last year, for example, state Treasurer Matt Fong warned that California’s bond debt level is approaching a danger zone.

Checchi said Tuesday, however, that “we have very significant unused bonding capacity in this state.” By comparison, he said American Airlines has nearly as much debt as California.

Checchi’s critics note that in buying Northwest Airlines in 1989, he burdened the company with $2.9 billion in debt (Checchi says he took a troubled company and turned it around).

And Checchi proposed child care credits that he said would largely help lower-income families trying to stay out of welfare or make the transition from welfare to a job.

Meanwhile on Tuesday, Checchi and another candidate for governor competed on television for the first time in what has been an unusually early start of heavy TV advertising.

Checchi, who is financing his campaign from a personal fortune, has spent more than $7 million on television ads since they started in November. On Tuesday, he started broadcasting two new commercials, one proposing a 10% cut in auto insurance rates and another in which his wife, Cathy, speaks about education.

Harman, a Checchi rival whose campaign is also tapping vast personal wealth, began her own TV ad blitz Tuesday. Two 30-second spots, offering a biographical sketch of the Torrance congresswoman and listing education, jobs and crime among her priorities, began running statewide Tuesday morning.

Times staff writer Mark Z. Barabak contributed to this story.