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Keeping Sales Tax Cut Could Harm Schools, Davis Says

Finances: GOP lawmakers are withholding support for the 2001-02 budget, which includes the quarter-cent levy.

July 09, 2001|JULIE TAMAKI | TIMES STAFF WRITER

SACRAMENTO — Gov. Gray Davis' administration warned Sunday that a Republican demand for a continuation of a sales tax cut probably will result in deep reductions in state spending on needy schoolchildren and other education programs.

GOP lawmakers are withholding their support for California's 2001-02 budget over the sales tax issue, which has emerged as a lightning rod in stalled budget negotiations.

Education Secretary Kerry Mazzoni said Sunday that the sales tax cut, with its nearly $600-million price tag, would probably kill plans to shower California's lowest-performing schools with $200 million in grants. Also threatened is $130 million to train teachers and principals and to provide students with after-school programs.

"We feel very strongly that agreeing to that would put us in a position where children would lose," Mazzoni said of the Republicans' push for the tax break. "We are at a point in California where we have great momentum in terms of school improvement. . . . We need to stay the course."

Spending on health and human services also could be diminished; particularly vulnerable are services not mandated by federal law, such as drug treatment and health prevention programs.

"They would be very difficult cuts," said Betty Yee, the finance department's budget guru.

As Davis officials painted a picture of doom and gloom, Assembly Republicans were preparing to snatch the paintbrush from their hands. GOP leaders announced that lower-house Republicans are prepared to approve the education portion of California's budget blueprint as early as today--without any reductions.

"This is a calling of their bluff," said Assembly GOP leader Dave Cox of Fair Oaks. "Our objective is to slow the growth of government while keeping funding for education whole."

"To argue that education funding has to be cut is clearly wrong, and the governor knows that," Senate GOP leader Jim Brulte of Rancho Cucamonga said in a statement.

Much of the debate surrounding the quarter-cent cut of the state sales tax has centered on how to cover its hefty cost. Republicans have zeroed in on $400 million in salaries for vacant state positions and $100 million generated by the state's fight against Medi-Cal fraud.

The Davis administration contends the GOP's numbers don't add up. On the matter of vacant jobs, for example, they say the amount of available salaries is about $50 million, not the $400 million touted by Republicans.

"The phantom employee issue is a phantom solution," Davis spokeswoman Hilary McLean said.

Democrats have emphasized that the spending plan already contains more than $4.3 billion in tax breaks. Softening state revenues have been cited as another reason to allow the quarter-cent sales tax to return as permitted by a 1991 law.

Preliminary revenue figures for June are $327 million below estimates made by finance officials in May, when Davis' revised budget was released.

Sales tax receipts declined year-over-year by 1.1% in June, coming in $118 million below forecast, bank and corporation taxes by $155 million, and personal income tax by $54 million below estimates. Higher than anticipated estimated income tax payments of $88 million were offset by refunds totaling $72 million above forecast and withholdings $70 million below.

The divide between the two parties on the budget is so great that Davis aides contend there is no reason for the governor to begin meeting with Brulte, Cox and their Democratic counterparts in the Legislature to begin negotiating a settlement. Davis has instead been making select appearances in public and on television to attack the Republican tax stance.

Los Angeles Unified School District Supt. Roy Romer was among the school proponents whom the Davis administration lined up Sunday to bolster its contention that education spending could be reduced if the Republicans continue to press ahead with the sales tax issue.

"If anybody is arguing for a tax cut at this point, the only rationale that might be reasonable is that it might be good for the economy," Romer said. "But let me say the economy of the future is dependent on skills and knowledge."

Other participants included the chairs of the Legislature's education committees, Assemblywoman Virginia Strom-Martin (D-Duncans Mills) and Sen. John Vasconcellos (D-Santa Clara). Both are advocates of helping low-performing schools.

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