Davis Seeks State Tax Exemption for Teachers

Declaring that teaching is society’s most important profession, Gov. Gray Davis on Saturday proposed eliminating state personal income tax for California’s credentialed public school teachers--setting off sharp denunciations from top lawmakers.

Although educators embraced the idea, legislative leaders--Democrats and Republicans alike--were stunned and skeptical, concerned that police and other public service employees would seek the same break. Reaction among leaders of other public employee unions ran from skeptical to a “me-too” hope that they could win similar tax breaks.

Some lawmakers’ reaction bordered on derisive, suggesting that Davis faces a tough fight if he hopes to win the required legislative approval as part of this summer’s budget battle.

“What is next?” asked Senate President Pro Tem John Burton (D-San Francisco). “Cops? Firefighters? Social workers? It is very unsound tax policy. You go down a very slippery slope.”

“This is special interest politics at its worst,” Assembly Republican Leader Scott Baugh of Huntington Beach said, in a reference to the powerful public school teachers’ lobby. Calling the proposal “discriminatory,” he added: “The governor is saying a teacher in a public school has a superior status to a private school teacher who may be making less money.”

Under the plan, a teacher making $50,000 a year would save $1,350 in state income taxes. A teacher paid $35,000 would save about $500 a year. Eliminating income taxes for the state’s roughly 280,000 credentialed public school teachers would amount to an overall tax cut of about $500 million a year.

“It is a clear, simple statement that if you teach in California, we’re going to reward you like we reward no other profession,” Davis said in a news conference by telephone as he prepared to release his revised budget proposal Monday for the 2000-01 fiscal year.

Critics noted that although Davis’ proposal would cut state income taxes for teachers, their federal income tax bite would increase because they would lose the ability to deduct state taxes from what they must pay Uncle Sam.

Because of California’s method of public school financing, they added, the loss of $500 million in general tax revenue would mean schools would lose about $230 million that they would otherwise be guaranteed.

“Say it ain’t so,” said state Sen. Charles Poochigian (R-Fresno). “I’m incredulous. . . . It’s obviously an ingratiating gesture toward teachers. But I assume teachers will see through it, and recognize that there will be a lot of resistance in the Legislature and from other working people.”

Michael Bustamante, Davis’ outgoing press secretary, was taken aback by the early criticism from legislators, and dismissed it.

“Perhaps this is a bigger idea than they’re accustomed to,” he said.

Davis also proposed pumping an additional $500 million into teachers’ bonuses. The Democratic governor called for $5,000 bonuses for all teachers, principals, counselors and other employees with certificates at schools that show 20% improvements next year in students’ scores on standardized tests, as measured by the Academic Performance Index.

The governor proposed awarding bonuses of $3,000 to teachers and other professionals at schools where scores rise by 15%, $2,500 if scores improve by 10%, and $2,000 if scores increase 5%.

Davis, who has made education the cornerstone of his administration, says he will not run for reelection in 2002 unless student test scores improve. Polls show that education is the electorate’s No. 1 concern; meanwhile California’s schools languish in national rankings of performance and spending.

The proposals come less than a week after Davis said he will push to shift $1.8 billion to local school districts in the 2000-01 school year, with the bulk of that likely to go for teachers’ pay raises. The state Department of Finance estimates that raising teachers’ salaries by 5% annually would cost about $1 billion.

By far, Davis’ most unusual proposal involves eliminating taxes for teachers--a benefit enjoyed by no other profession in this state, and one not offered to teachers in any other state that has an income tax.

“There is nothing gray about this idea,” said Assembly Speaker Bob Hertzberg (D-Sherman Oaks). “It is bold. But I’m concerned that it raises a whole new dynamic in tax policy.”

While Davis briefed some legislative leaders Saturday morning shortly before his news conference, he afforded them little opportunity to offer suggestions. The reaction was harsh. Top Republicans, who favor tax cuts, and Democrats, who have long sought more school spending, denounced the idea.

The tax break would extend to all professionals at public schools, including principals, counselors and librarians, so long as they have full teaching credentials. Davis brushed aside questions about whether police or firefighters might seek the same sort of tax break.

“We’re making a value judgment that being a teacher is the most important thing you can for your country in the year 2000,” Davis said. “There may be people who disagree with us. But I suggest to you that in an information-based economy, you’d be hard pressed to find another profession we should value more.”

Davis said he hit on the idea last week when he and his aides were looking at a state surplus that will be between $11 billion and $16 billion in a budget for fiscal year 2000 that will top $90 billion.

He likened it to an idea by President Dwight D. Eisenhower, after the Soviet Union launched Sputnik in the 1950s, to grant free tuition to any college student who wanted to become an engineer, so the U.S. could win the race to space. (Federal support for technical education increased substantially in the years after Sputnik.)

“I say in the year 2000, there is no profession more valuable . . . than teaching,” Davis said.

The proposal comes as the governor tries to repair frayed relations with the powerful California Teachers Assn., which spent $1.2 million to help elect him in 1998. Since taking office 16 months ago, Davis has angered union leaders with several proposals.

For example, he issued a call for more teachers in January but suggested that young college graduates consider working in the classroom to be like participating in the Peace Corps: Teach for a few years as a public service before moving on to more lucrative work.

He has stopped talking about that idea, because educators responded by saying such ideas would diminish teaching as a career.

Becky Zoglman, spokeswoman for the teachers association, lauded Davis’ idea, calling it “a creative way to help teachers. It shows a level of respect for the profession.”

Davis also won initial support from California Supt. of Public Instruction Delaine Eastin, who called it a “good gesture.” But she also said teachers still deserve pay raises.

Eastin said teachers are generally paid less than police officers, firefighters and state prison guards. The guards, she said, earn more than $50,000 but need only high school diplomas, while teachers must complete at least five years of college.

“The elephant in the room in the discussion about improving schools has been teacher salaries,” Eastin said. “The single most important factor in the quality of education is the quality of the teacher.”

The tax elimination idea surprised public employee union leaders.

“You’ll get no complaints here,” said Geoffrey Garfield, spokesman for the Los Angeles Police Protective League. “It’s opening the door for us to make a similar proposal.”

Police pay and pension benefits generally are superior to those of teachers. Perhaps closer to teaching is nursing. Both professions require college degrees and suffer from a shortage of qualified people.

“This is a very interesting proposal,” said Jill Furillo, head of governmental relations for the California Nurses Assn. “As a profession that has traditionally been underpaid, we understand and are sympathetic to teachers. We think it’s important that people are looking for far-reaching solutions.”

Other union leaders see it as a threat that could chip away at their pay and benefits. Annelle Grajeda, general manager of Service Employees International Union, Local 660, which represents 45,000 Los Angeles County workers, said “cutting taxes isn’t the answer.”

“When you cut taxes,” Grajeda said, “it takes the revenue away from other public employees and public services. Rather than cut their taxes, pay them more money.”

*

Times staff writer Bobby Cuza contributed to this story.