Democrats' tax-hike plan defeated

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Democrats' tax-hike plan defeated
By John Hill -- Bee Capitol Bureau
Published 2:15 a.m. PDT Wednesday, June 26, 2002
The Senate fell one vote shy Tuesday of approving a package of tax increases to close California's budget gap.

Senate President Pro Tem John Burton, D-San Francisco, said the Senate would meet every day to try to approve the budget by the start of the fiscal year Monday.

Senate Democrats need one Republican vote to attain the two-thirds majority to pass the budget and tax increases.

But Republicans gave no ground Tuesday as the Senate considered a package of tax increases totalling $4.8 billion, including an increase targeting high-income taxpayers.

"If we adopt this today, we will still have a budget problem and we will have deficits as far as the eye can see," said Senate Republican leader Jim Brulte of Rancho Cucamonga.

One Republican considered likely to cast the deciding vote is Sen. Maurice Johannessen of Redding. Johannessen, who was one of two Senate Republicans to vote for the budget last year, said Tuesday that he will not vote for an income tax increase.

"Everything else is on the table," he said -- including a doubling of the vehicle license fee proposed by Gov. Gray Davis and a sales tax increase. But Johannessen said he would like to see further cuts to state programs before he'll support new taxes.

He said he was aware of rumors that he would be appointed to a state job in return for supporting the budget. But Johannessen, who cannot run for the Senate again because of term limits, said he has not been approached.

"I have not been offered anything, nor would I take anything," he said.

But he said he is open to offers that would benefit his district, which spans 11 Northern California counties.

"If you ask me if I would like to have something for my district -- certainly," he said. "That's what I'm here for. You may call that pork. I call it 'district aug-mentations.' "

The centerpiece of the tax proposal was a two-year increase in the high-bracket income tax rates. For single filers with taxable income of $130,000 to $260,000, the tax rate would go from 9.3 percent to 10 percent. It would increase to 11 percent for single filers with incomes topping $260,000.

For married taxpayers filing a joint return, the 10 percent rate would apply above $260,000 of taxable income and the 11 percent above $520,000.

Burton pointed out that the higher rates were in effect for much of the past 25 years.

Taking into account the deduction for state taxes on federal returns, the hike would cost a single taxpayer with taxable income of $200,000 an additional $318. For a married couple with an income of $1.5 million, it would mean $11,346 in additional taxes.

"This is not really going to send anybody to the poorhouse," Burton said.

The bill laid out an array of programs that Democrats say would be saved with the tax money. The biggest item is $3.7 billion for cities and counties to replace the money they lost when the state decreased the vehicle license fee.

But Republicans said the unprecedented $23.6 billion shortfall in the $77 billion general fund was caused by runaway spending, not the sudden dropoff in revenues from capital gains cited by Democrats.

"This budget crisis is not the fault of taxpayers for not paying enough taxes," said Sen. Tom McClintock, R-Simi Valley. "It is the fault of rampant waste and mismanagement practiced downstairs in the corner office" -- Davis' office.

The Assembly plans to take up a similar bill on Thursday.
 

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