YOU ARE HERE: LAT HomeCollections

Bills to Help Businesses Advance Rapidly : Legislation: One measure would give tax breaks; the other eases environmental requirements. Despite wide support, key opposition remains.


SACRAMENTO — With state lawmakers eager to make it cheaper for companies to do business in California, separate bills to cut environmental restrictions and to reduce taxes on multinational businesses and other firms advanced quickly through the Legislature on Wednesday.

Assembly Speaker Willie Brown, key Republican lawmakers and powerful business lobbies joined to push the measures, declaring that both packages are needed to help California pull out of the four-year recession.

Although proponents have all but declared victory, both measures face more hurdles today and Friday, the final day of the legislative session. But if the measures clear the Legislature, Gov. Pete Wilson is likely to sign them.

In the more controversial of the measures, the Assembly Ways and Means Committee approved a series of tax breaks to businesses that would be worth more than $739 million over the next three years.

The bill would give tax incentives to manufacturers that create jobs in California, and tax credits for research and development. It would also cut capital gains taxes on small companies and provide tax incentives to encourage space launches from Vandenberg Air Force Base. And over the next three years, it would cut by $150 million the state's so-called unitary tax on multinational corporations.

To make up part of the loss in tax revenue, the measure would reduce income tax deductions for business meals, allowing businesses to take half the cost of a business meal as a tax deduction. As it is, they can deduct 80% of the cost.

Ways and Means Committee Chairman John Vasconcellos (D-Santa Clara), crossing Speaker Brown, scarcely controlled his contempt for the tax measure during the afternoon debate. At one point, he referred to the "billions we're giving away for these rich folks." He tried but failed to narrow the package, and the committee passed the bills by a vote of 12 to 7.

"We got benefits for multinationals. We got benefits for millionaires," said Lenny Goldberg, a leader of the liberal groups that opposed the tax bill. "Business interests are very powerful and can get what they want on tax policy in this climate."

Leading the charge for the bill were the California Manufacturers' Assn. and its director, former state Sen. William Campbell.

Earlier in the day, for the first time in his lengthy career in Sacramento, Campbell appeared at a joint news conference with Assemblyman Byron D. Sher (D-Palo Alto), among the strongest environmentalists in the Legislature. He lauded Sher for negotiating the plan to cut environmental red tape.

Sher said the package of bills retains the integrity of the California Environmental Quality Act, the keystone of California environmental law. But he said the overhaul of the 20-year-old act was overdue.

The bills seek to limit the size and number of environmental impact reports, and limit the ability of opponents to bring lawsuits challenging the adequacy of the reports.

The changes would allow developers to produce single master environmental impact reports on their projects. In later phases of the developments, they would not have to produce additional impact reports, as they do now. The reports can take years to complete; some are several inches thick and cost upward of $1 million. They must be completed and approved before building projects can proceed.

In the afternoon, at the Ways and Means Committee, Campbell appeared again and testified for the tax package aimed at helping businesses. The former senator from the San Gabriel Valley predicted that the tax package would create 100,000 manufacturing jobs by the year 2001, not counting jobs likely to be lost in the aerospace industry.

The tax legislation merges Brown's bill to cut taxes on businesses and a Senate bill to cut the unitary tax on foreign corporations that do business in California.

British officials and corporations have been demanding the change. The Clinton Administration has been monitoring the bill's progress, hoping to avoid a trade war with the British.

Brown had been pushing a sales tax exemption for businesses for purchases of manufacturing equipment. But he agreed to a combination of tax incentives for manufacturers and sales tax exemptions for businesses when they buy manufacturing equipment.

Brown won key support from Sen. Alfred E. Alquist (D-San Jose), an influential member of the upper house. But his measure faced a rough ride in the Senate. Sen. Bill Lockyer (D-Hayward), the heir apparent to the Senate president pro tem post, said he would oppose it.

"The Speaker's proposal allows a business to take tax benefits from California and invest in Texas or South Africa," Lockyer said. "We want investment in California."

Los Angeles Times Articles