Break on Business Tax, More Funds for Courts Sought

SACRAMENTO — A potentially powerful coalition of business and county lobbyists is quietly promoting legislation that would raise nearly $500 million, giving half of it back to corporations in tax benefits and the other half to counties to run trial courts.

Meanwhile, two measures designed to alleviate the state’s transportation crisis passed their first test Monday when an Assembly committee agreed to let voters decide whether the state spending limit should be altered so money raised by an increase in the gasoline tax could be spent on highway construction.

The tax increase proposal backed by the business and county alliance is still in the discussion stage, but lobbyists have been aggressively pushing the plan.

State Chamber Chief

Business lobbyists told The Times that Kirk West, head of the California Chamber of Commerce, talked up the plan to Gov. George Deukmejian during the governor’s recent trip to Australia. West, a former secretary of business, transportation and housing in the Deukmejian Administration, went on the trip with a delegation of business executives to promote California industry and agriculture.

Under the proposal, revenues would be raised by speeding the collection of sales and income taxes and by conforming state tax law for corporations to the 1987 federal tax law. Adopting the federal tax rules would generate about $240 million more each year.

Lobbyists for the state Chamber of Commerce, the California Manufacturers Assn., the California Taxpayers Assn., the County Supervisors Assn. of California and Los Angeles County are all working on the plan, advocates said.

Counties support the proposal because it would bring in extra tax revenues to pay for the operation of trial courts. The Legislature last year promised counties $350 million to pay for these courts, but then left the money out of the new budget because of an unexpected drop-off in state tax revenue.

Major corporations with worldwide business operations have been seeking more favorable tax treatment in California ever since the governor and the Legislature two years ago enacted legislation giving major breaks to foreign-based multinational concerns.

Unable to get a tax bill moving on their own, corporate lobbyists decided to join forces with the counties to increase their clout with the Legislature.

“We are just kind of shopping it around right now to see if anything can come of it,” said Fred Main, a tax specialist for the California Chamber of Commerce. “We are talking to legislators to see if it has a chance before we create a formal alliance.”

The two bills that would help raise money for transit improvements were approved by the Assembly Revenue and Taxation Committee after their supporters heavily lobbied members of the committee.

One of the measures would ask voters to loosen a constitutional limit on state spending approved by voters in 1979 so the state could spend more on transportation if the gasoline tax were increased. The other bill calls for a statewide advisory vote to determine if voters favor an increase of up to 15 cents a gallon in the gasoline tax. The Legislature would still have to enact such an increase if voters favored it.

The committee approved the spending limit ballot measure by a vote of 12 to 3. The committee approved the advisory vote legislation by a vote of 14 to 1. Both measures must win the approval of the Assembly and Senate before they can be placed on the ballot.

Supporters of the measures said they offered the only hope for addressing the transportation problem during the remainder of this legislative session, which is scheduled to end Aug. 31.

In June, the voters narrowly rejected a bond measure sponsored by Deukmejian that would have raised $1 billion for transportation projects.

Advisory Vote on Gas Tax

Sen. William Campbell (R-Hacienda Heights) introduced the measure calling for an advisory vote on increasing the fuel tax, which is now 9 cents a gallon. Every 1-cent increase would raise about $142 million a year, he said.

“With just a few cents, you could dramatically increase the amount of money available for construction,” Campbell told the committee.

While many legislators favor increasing the gasoline tax, the idea of raising taxes is politically unpalatable. However, some lawmakers believe that if a gas tax increase was approved in a plebiscite they could win sufficient support from the Legislature and the governor.

In order to spend money that a gasoline tax increase would generate, the voters would have to agree to modify the constitutional spending limit they approved in 1979. Two ballot measures that sought to alter the spending limit also were rejected by the voters in June.

The constitutional amendment proposed by Sen. Wadie P. Deddeh (D-Chula Vista) would declare that any amount of the fuel tax above the current 9-cent level would be declared a “user fee,” not a tax, and therefore would not be subject to the spending limit.

Deddeh argued for the measure saying that sitting in traffic jams already costs motorists $2 billion a year in wasted time.