Calif. Educators Seek To Cash In On Good Times

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The annual skirmish over California's budget has a new twist this year: The fight isn't over whose programs will get cut, but rather how to divvy up the spoils of the state's new economic prosperity.

And school officials want to make sure that education gets its cut.

After a slump that spanned the first half of the 1990s, the state economy is rebounding, giving lawmakers a rare chance to dole out surplus cash.

Gov. Pete Wilson has proposed a budget that would boost state aid to schools by about 4.5 percent, to roughly $17.8 billion. Such a hike would mark the second consecutive increase after five straight years in which state aid essentially was frozen.

But at the same time, the second-term Republican has proposed slashing income and business taxes by 15 percent over the next four years, a move that state and local school officials argue would rob education of revenues that could help them recover from the fiscal crisis earlier in the decade.

State education leaders denounced the tax cut in a news conference last month and said they planned to punish its supporters politically.

"I will not support any candidate who supports the tax cut, and I might get involved in supporting their opponents," said Delaine Eastin, the state schools superintendent. And lawmakers who vote for the proposed cut, Ms. Eastin, a Democrat, said, will be considered "enemies of the children."

The governor and his supporters argue that schools would benefit over the long run from a stronger economy created by a tax cut. They plan to defend the proposal in coming weeks in a debate that will echo similar arguments recently waged across the country.

Tax-Cut Trend

Tax cutting has become a popular pursuit nationwide, as many states in recent years enjoyed their best fiscal health of the 1990s.

Though a few states raised taxes last year, they were offset by other states cutting taxes--to the tune of a net of $1.2 billion, according to the Denver-based National Conference of State Legislatures. It was the first net reduction of state taxes in a decade.

Major tax cuts aren't expected this year, as states are reporting only modest economic growth, and lawmakers are protecting their budgets against impending cuts in federal funding.

But in California, the climate for a tax cut this year appears better than last year, when lawmakers rejected a similar plan pushed by Gov. Wilson.

The state's economic growth--fueled by international trade, high-technology industries, and tourism--is expected to outpace the national average over the next few years. Legislative analysts also recently forecast that the state will have a $900 million budget surplus this year.

All this makes it a prime time to cut taxes, Mr. Wilson contends. High taxes have hamstrung the state's economic expansion and discouraged businesses from moving to California, he says.

"I propose that we leave some of the surplus revenue created by this economic recovery with the people who earned it," the governor said in his January State of the State Address to lawmakers. "Let's let the families who earned this money--not government--decide how it can best be spent."

Schools the Big Loser?

Debate over the tax cut so far has centered largely on how schools would fare under the proposal, said Lenny Goldberg, the executive director of the California Tax Reform Association and a critic of the cut.

"It's not just education that wants the money," Mr. Goldberg said, "but politically, the issue has been framed as 'education or the tax cut.'"

Schools are seen as the big loser under the governor's proposed tax cut, in part because of estimates from the state's nonpartisan legislative analyst that the proposal would reduce revenues available for schools by more than $5 billion over the next four years.

"When we look at what we've been through for the last five years, the loss of more than $5 billion is just devastating," said Rebecca Sargent, the president of the California School Boards Association. "We just can't afford that kind of decline in infrastructure."

Mr. Wilson and his supporters counter that a tax cut is needed to fuel California's economic engine, which ultimately determines how much money schools will get.

"If we learned anything from the past five years, it's that we have to pay attention to our economic knitting if schools are to get anything," said Maureen DiMarco, the governor's education adviser.

Vol. 15, Issue 29

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