GOP Lawmakers Urge $3.2-Billion State Tax Cut

Decrying the rapid growth of state government spending, Republican state lawmakers Wednesday called for a $3.2-billion tax cut for most Californians, and an additional $265 million in business tax breaks.

The ambitious Republican tax cut proposal is sure to be a key point of contention in next year’s state budget negotiations. But given their relatively small numbers in the Legislature, the Republicans’ chance of success seems slim.

The GOP plan includes $1.5 billion in permanent tax cuts, and $1.7 billion in one-time cuts. The largest single cut, valued at $1.5 billion, would come as a one-year moratorium on the sales tax charged on gasoline.

Additionally, Republicans would like to abolish the so-called car tax, charged to vehicle owners each year when they renew their registrations. The car tax has been cut by more than half in the last three years.

In an element aimed at families, Republicans proposed raising the income tax credit that people claim for children and other dependents, from the current $235 per child to $355.

The proposed $265 million in business tax breaks includes credits for the purchase of manufacturing equipment and the cost of research, as well as expanded tax breaks for farmers. Republicans also want to grant a sales tax exemption to companies for the purchase of equipment to launch satellites.

“It’s no secret that the governor takes a cautious approach to the state’s finances,” said Steve Maviglio, Gov. Gray Davis’ spokesman, on Wednesday. “With President-elect Bush making noise about a possible recession . . . you can expect the governor to move slowly on any tax cut that would put the state in jeopardy.”

The leader of the Senate’s minority Republicans, Jim Brulte of Rancho Cucamonga, pointed out that although California’s economy has expanded, state government spending has spiraled upward faster. The state budget has grown 37% in the last two years.

“Government in California is growing way too fast,” Brulte said.

Brulte, appearing with Assembly GOP leader Bill Campbell of Villa Park, cited U.S. Census statistics showing that California’s overall tax bite ranks eighth highest among all states, at $2,183 per capita. Californians pay slightly more proportionately in taxes than people in New York, and more than $900 above the $1,280 per capita tax bite in Texas.

Economists say, however, that per capita tax figures primarily show that wages are higher in California than those in most states. State Department of Finance experts say a more telling statistic is the amount Californians pay for each $1,000 of income. Using that measure, California ranks in the middle of all states.

Brulte said Republicans would be prepared to scale back their request if the economy faltered significantly. But Republicans for now are relying on the forecast by the independent legislative analyst’s office that California’s budget surplus will exceed $10 billion.