Tax Hikes Proposed to Avert State Fiscal Crises : Finances: Roberti’s suggestions would increase sales levy on standby basis. He would also raise rates on high-income residents.
SACRAMENTO — Senate Democratic Leader David A. Roberti on Tuesday suggested a short-term “standby†sales tax increase that would kick in if falling state revenues plunge deeper.
Also, Roberti called for a permanent income tax increase for high-income Californians as a long-range step toward averting budget crises such as the estimated $7-billion to $10-billion shortage the state faces over the next 17 months.
Roberti suggested that even the more pessimistic projections of the shortfall may be too rosy.
“I think $10 billion is too optimistic,†said the Los Angeles legislator as he put on the budget negotiating table his opening cards for dealing with the unprecedented revenue shortfall.
He also said politicians must make clear to Californians--who polls show oppose general tax increases--that “you can’t have a maintenance of services and still live on a diet of no taxes. It’s unrealistic. It’s deceptive.â€
Both Roberti’s standby tax and proposed higher taxation of upper level incomes found a frosty reception in the office of Republican Gov. Pete Wilson, who has advanced his own blueprint that combines cuts and selected fee and tax increases to match state spending with revenue.
“There is just a limitation on how much you can tax, especially during a recessionary period,†said Wilson press secretary Bill Livingstone. He said such tax increases as Roberti proposed “may worsen the economic climate.â€
In a speech to the Sacramento Press Club, Roberti jumped squarely into what he called the state’s “fiscal mess†and warned that Senate Democrats favor increased taxes as one way to avert deep cuts in education programs and health services if the economy further sours.
For starters, Roberti said his suggested standby tax hike would automatically take effect to protect education and health if continued economic hard times caused revenue to fall short of projections in the next fiscal year, starting July 1.
“If our budget problems worsen . . . additional revenues must be found,†Roberti said. “We must not continue to resolve our growing fiscal problems by cutting health and education services.â€
Roberti’s standby tax was proposed along the lines of a half-cent sales tax increase enacted in 1983 when then-Gov. George Deukmejian confronted similar fiscal hemorrhaging. The economy improved and the tax was never activated.
Roberti did not specify what type of increase should be put on standby, but cited the 1983 sales levy and noted that a 1-cent increase in the statewide 6% sales tax would produce $3 billion a year. He termed a 5-cent hike too high.
Looking beyond the current budget crisis toward a more permanent solution that does not lurch from one year to the next with budget cuts and piecemeal tax and fee increases, Roberti said, requires a general tax increase.
“Any intelligent observer of the California scene recognizes that there has to be an increase in revenues, part of which is going to have to be some kind of general tax increase,†Roberti said.
An aide said Roberti has in mind boosting the income tax rates for single people with adjusted gross incomes starting at $100,000 a year and for couples making $200,000 and up. Roberti suggested returning the top tax bracket to 11% from the present 9.3%. The rates on those incomes were lowered in 1987 to conform the California tax codes to those of the federal government. The reduction was intended to help compensate for capital gains breaks that those in the high income brackets had to give up.
“It seems to make no sense that the wealthiest Californians don’t pay at the tax levels that were there when we had better times,†Roberti said.
He repeated his earlier proposals that in seeking permanent sources of additional revenue certain business tax loopholes be closed, a traditional Democratic target. These include breaks for research and development and for carrying losses forward from one year to another.
“Before we call upon the people of California to come up with more money, we have to be willing to say that we’ve called on the special interests, special pleaders . . . to make their (contribution) at the same time,†he said.
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