Assembly OKs Plan With $2.7-Billion Tax Cut

Setting up a struggle with the state Senate over taxes, the Assembly on Friday approved its $100-billion version of a budget for the new fiscal year that includes a $2.7-billion tax cut.

That cut is $140 million more than Gov. Gray Davis has proposed, and over $1 billion more than Senate Democrats offered earlier this week.

Unlike Davis and the Senate, however, the Assembly did not specify how it would make the cuts. Davis proposes checks of $150 for everyone who paid 1999 income taxes, for a total of $1.7 billion, and an exemption from state income taxes for public school teachers, saving them $545 million. Senate Democrats are proposing $1.4 billion in sales tax rebates.

The Assembly approved the overall budget 54 to 10. A Senate-Assembly committee will begin meeting next week to resolve differences between the two houses.

The state Constitution establishes June 15 as the deadline for the Legislature to approve a budget and send it to the governor. The governor must sign it by the July 1 start of the new fiscal year--though there is no penalty for failing to meet the often-ignored deadlines.

Republicans are in a minority in the Legislature. But because state law requires that the budget be approved by a two-thirds vote in each house, the GOP has significant power over spending decisions. Assembly Republicans called the $2.7 billion the minimum amount for a tax cut.

“We are not interested in a budget that does not have substantial and permanent tax cut relief,” said Scott Baugh of Huntington Beach, leader of the Assembly’s Republicans.

Several other Republicans decried the ballooning budget. Assemblyman Tom McClintock of Northridge said the budget has grown 20% in a year, and warned that it will lead to “governmental glut” and a “bureaucratic Bacchanalia.”

In addition to deeper tax cuts, Republicans vow to seek more money for freeway construction and less for mass transit. The factions appear close to agreement on the biggest single part of the budget, the $30 billion set aside for public schools.