GOP legislators put tax cuts on back burner POLITICS: Leaders get an early start unveiling their goals for spending state budget surplus. December 21, 1999 By DANIEL M. WEINTRAUB The Orange County Register http://www.ocregister.com/politics/budgs21w.shtml <http://www.ocregister.com/politics/budgs21w.shtml> SACRAMENTO -- Republicans in the Legislature, trying to get a jump on Democratic Gov. Gray Davis, have begun laying plans for another looming budget surplus generated by the state's red-hot economy. Perhaps surprisingly, though, tax cuts aren't high on the list of Republican priorities for a reserve that is projected to top $2.6 billion when the fiscal year ends June 30. Instead, the Legislature's two Republican leaders - Sen. Ross Johnson of Irvine and Assemblyman Scott Baugh of Huntington Beach - have spent the past month proposing increased spending they say is in line with Republican principles. Baugh outlined a plan for education spending Monday that includes $600 million a year for school construction and another $250 million to wire classrooms for the Internet. Johnson, meanwhile, has proposed boosting aid to local government and increasing spending on public works - from roads to libraries to sewers. He also wants to cut college tuition in half, which would cost taxpayers about a half-billion dollars a year. Baugh promised more proposals, including some sort of tax cut, in the weeks ahead. And an aide to Johnson said Senate Republicans plan to offer at least $400 million in tax breaks for costs related to child care, dependent care and long-term health care. But by leaving those proposals for later, Republicans are signaling that tax cuts no longer are the party's top priority. One reason is that another reduction in the car tax, or vehicle-license fee, already is scheduled to kick in. That tax cut was approved by the Legislature and former Gov. Pete Wilson in 1998 but was programmed to phase in slowly and halt automatically if the growth in general tax revenues didn't meet projections. That hasn't been a problem. The original 25 percent car-tax reduction was followed by a 10 percent cut that takes effect Jan. 1. By 2003, according to the Legislature's nonpartisan analyst, revenues should be sufficient to trigger the entire 67 percent cut. Another reason Republican leaders won't push harder for a bigger tax cut is realism: They probably lack the unity they'd need to block approval of the budget for long enough next summer to force Democrats to accept major reductions. With the public hardly clamoring for tax relief, the Democratic majorities won't find it hard to entice two Republican senators and six Republican Assembly members to break ranks and provide the margin needed to pass a budget in each house. So if most of the new money is going to be spent, Republicans are hoping to have as much influence as possible on how it is allocated. That's why Johnson and Baugh are rolling out their ideas now rather than waiting to react to what Davis does when he outlines his own budget proposal Jan. 10. Baugh said Republicans want to set aside much of the growth in state tax receipts for construction projects. That would save the state money in the long run, he said, because it would mean building schools, roads and other projects with cash rather than borrowing and paying interest. "While we are the party of smaller government, we are also the party of efficient government, and we believe from a financial perspective it's far better to invest these dollars now than to wait for a crisis to occur and then scramble for some short-sighted solution," Baugh said. Baugh said he believes the Republican proposals dovetail nicely with the Democratic governor's cautious nature. Davis, he said, should welcome the chance to spend money on projects that can be stopped or slowed down if the economy worsens and tax revenues don't live up to projections. By contrast, Democrats in the Legislature have been more willing to commit the money to new or expanded programs that would be harder to trim back if money runs out. "I think the governor and the Assembly Republicans share the same view," Baugh said. "We don't want an expansion of social-welfare programs."
