Lawmakers Propose Altering Davis Tax Rebate, Teacher Plans

Lawmakers trying to fashion a budget propose scrapping two key parts of Gov. Gray Davis’ spending plan in favor of a richer rebate for all taxpayers, and a break specifically for teachers that would save them $1,000 a year.

The counteroffers are major parts of the $100-billion spending plan for the new fiscal year starting July 1, and come as the June 15 deadline nears for the Legislature to approve a budget.

A Senate-Assembly budget committee Sunday night tentatively voted down Davis’ proposal to grant $150 income tax rebates to anyone who paid 1999 state income taxes. In exchange, Democrats and Republicans on the committee endorsed the concept of giving people sales tax rebates.

Sen. Steve Peace (D-El Cajon), chairman of the committee, said all taxpayers would receive some money under his scheme. Davis’ plan, by contrast, would give rebates only to people who paid income taxes, not low-wage workers and pensioners who paid none.

What’s more, Davis’ state income tax rebate would raise the amount that many people must pay in federal income taxes. A sales tax rebate would not add to what Californians must pay Uncle Sam, Peace says.

On Monday, Sen. Patrick Johnston (D-Stockton) proposed giving teachers an income tax credit of up to $500 to cover their costs of buying school supplies, and lowering teachers’ payroll taxes to pay for their retirement. Johnston estimates that teachers would pocket an extra $1,000 a year under his proposal.

The conference committee approved the teacher package as an alternative to what Davis calls the “crown jewel” of his proposed budget--exempting public school teachers from state income taxes. With Republicans, Democrats and teachers themselves opposed to Davis’ teacher tax elimination idea, Davis administration officials have begun trying to find alternatives to it.

Davis spokeswoman Hilary McLean says Davis continues to stand by the “bold” idea of the teacher tax exemption. “Don’t count the governor out,” McClean said Monday.