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CONTRARIAN QUESTIONS ABOUT POST-QUAKE AID : It's Our Money, Not a Gift from Washington : A sales tax worked in 1989, but it's a different story in recession-racked 1994.

January 31, 1994|JOEL FOX | Joel Fox is president of the Howard Jarvis Taxpayers Assn.

Like a jolting aftershock following the Northridge earthquake, some politicians immediately called for a tax increase to repair the damage. They wanted to follow the example set after the 1989 Loma Prieta earthquake of Northern California, when sales taxes were raised to pay the costs.

But for California in 1994, tax increases would tremble our already unsteady economy. In economic terms, 1994 California is worlds apart from 1989 California.

The Golden State has been mired in a recession for nearly all those years. According to legislative sources, a quarter-cent sales tax for 13 months, as in 1989, would bring in $100 million less because of the poor economy.

In 1989, when the sales tax was increased for the earthquake, the rate was 1 1/4 cents less than it is today. The gas tax is twice as high as it was in 1989. And the current 18-cent state gas tax does not include the recent federal gas-tax increases.

While Californians agreed to tax themselves after the 1989 disaster, that has not been common practice. After the floods of last summer, Iowa, Illinois, Missouri and Wisconsin did not raise state taxes for disaster relief. After Hurricane Andrew nearly blew Florida into a different time zone, the state did not raise taxes.

Florida responded to its crisis in a unique way. Officials set up a trust fund for hurricane relief to capture the anticipated tax revenue from a buying and construction surge. Much of the private property lost to Hurricane Andrew was insured, however, so Florida officials anticipated money from insurance companies to cover damages. A majority of the private property destroyed by the Northridge quake was not insured. But there certainly will be money spent on reconstruction, and the increased tax revenue this brings should be considered in formulating revenue needs.

President Clinton should be commended for the $7.5-billion aid package he proposed. But California is getting nothing more, proportionately, than other disaster areas get. The accepted perception is that California must kick in money of its own, likely in the form of a tax increase. Some or all of that matching money could come from previously authorized but unspent bonds.

But California deserves additional federal funds without raising its own taxes. That is because since 1989, California has been a "donor" state, sending more tax dollars to the federal government than it receives in expenditures and grants. Congress should balance the books and send California the excess billion or so dollars that state taxpayers have sent to Washington. Truly, this money is our money.

To get the money from Washington, the California congressional delegation must be united. A few Republicans are balking at the aid package, but even John Wayne Republicans cheer when the cavalry rides to the rescue of the besieged wagon train.

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