Governor May Compromise on AIDS Tax Credits

SACRAMENTO — Gov. George Deukmejian may offer a compromise in hopes of preventing critics from following through on a proposed constitutional amendment to allow a tax credit for individuals and businesses making contributions to AIDS research, the governor’s finance director said Thursday.

Deukmejian vetoed a tax credit bill last year. He is also opposed to the proposed constitutional amendment, which is backed by state Controller Gray Davis and some other Democrats.

But state Finance Director Jesse Huff told members of the Senate Budget and Fiscal Review Committee that the Republican governor was seeking a compromise.

The governor, he said, has “an interest in trying to explore some alternatives” to the constitutional amendment.

Huff, who is Deukmejian’s chief budget adviser, said Administration officials are working “to develop some other types of proposals” that would generate cash contributions for the fight against AIDS.

Huff did not provide any details, but left open the possibility that the governor might support some kind of tax credit.

Huff also told the committee that Deukmejian is “open” to suggestions that he increase money for AIDS research and treatment in his recently proposed $44.3-billion state budget for the next fiscal year.

Deukmejian has been criticized by Democrats for providing too “modest” an increase in funding for AIDS programs, given the public health threat the deadly disease poses. The governor’s budget would boost funding for AIDS programs by $5.3 million to $70.2 million a year. This would bring the total amount of state money committed to the AIDS fight to $190 million since 1983.

Critics of the governor want to put the constitutional amendment for an AIDS tax credit on the June ballot, but it is stalled in the Senate Constitutional Amendments Committee. Members of the committee hope Deukmejian and authors of the ballot measure can reach a compromise.

The measure would provide a 55% state income tax credit for donations made to a special AIDS research fund. Public and private research foundations ultimately would receive the money. Estimates are that the tax credit plan could raise $150 million for AIDS research over a 2 1/2-year period.

On another issue, Huff told the committee that there is still $42 million, and probably more, in the state’s tax rebate account. The $42 million is the amount left from last year’s $1.1-billion budget surplus that was rebated to taxpayers during the Christmas season.

Huff said the $42 million accumulated because state officials underestimated the amount that would be available for a rebate. He said the figure would likely grow, because a number of rebate checks likely will be returned or go unclaimed.

The finance director noted that a 1979 voter-approved initiative requires that the money be given back to taxpayers, but said no decision has been made on what form the rebate will take. He invited lawmakers to offer suggestions. Rather than a straight rebate, Huff said the money might be used to slightly lower existing tax rates.