All Aboard the Bandwagon!

Across the U.S., politicians scramble to join the tax revolt of 78

That California tax quake was producing nationwide aftershocks last week. What had begun as an outburst against the lowest levels of government on the West Coast was stinging officials at the highest levels a continent away in Washington--and quite a few in between as well.

In the capital, Jimmy Carter told a press conference, a bit defensively: "All of us are concerned about the budget levels, about unnecessary spending, about more efficient operation of government and about lower taxation." Those trends, he claimed, had been set "by us here in Washington" even before Proposition 13. slashing more than $7 billion from local property taxes, won thunderous approval in California. But, said Carter, he welcomed Proposition 13's overwhelming passage for the impetus it might provide for frugality in Congress.

In thus portraying himself as an advocate of tax cuts and stringent budgets, Carter joined a swelling legion of vote-conscious politicians across the U.S. The President drew a sharp contrast between his position and that of Congress, which has been tinkering with his proposed $25 billion income tax reduction and threatening to spend more than he had wanted. But there were some signs on Capitol Hill that Congress had heard the California message too. Said North Carolina Congressman James Martin, a conservative Republican: "I see people who've traditionally voted for everything, no matter what it cost, and now they're trying to look like fiscal conservatives. It's the two-by-four effect. People up here are getting hit right between the eyes."

For years Ohio Republican Clarence Miller has been proposing 5% reductions in the appropriations to run the federal departments--and has been ignored. Last week he demanded a 2% cut in the operating funds for the departments of Health, Education and Welfare, and Labor--and the cut passed the House, 220 to 181. If sustained by the Senate, this would save $800 million.

Ironically, the California vote will reduce federal income tax deductions of residents and thus give Washington a windfall of $2.3 billion a year. But Indiana Democrat Andrew Jacobs has introduced a bill requiring such revenue to be used to reduce the national debt or budget deficit. Argued Jacobs: "You can't just say, 'Wowee, $2 billion more for spending.' " In general, however, Washington politicians predicted that Proposition 13 would have less impact at the federal level than might be expected. "People are taking hold of whatever handles they can find," said New York Republican Congressman Barber Conable, "but it's very difficult to get hold of the handles of the Federal Government." That did not ease the fears of Maryland Democratic Congressman Parren Mitchell, leader of the Congressional Black Caucus, that social services will be cut most sharply by the economy knives. Mitchell predicted that "every single human-resources program is going to be in danger. Medicare and Medicaid, welfare, the jobs programs."

A more extreme fear among blacks was expressed in an Atlanta speech by the Rev. Jesse Jackson. "The tax rebellion is now being used as the new code word--like busing and Bakke--for racism and classism," he told a national P.T.A. convention. The revolt, he claimed later, may prove to be "the greatest threat the black middle class has ever known."

Despite such concern, the rebellion against taxes seemed to transcend class and racial differences. The New York Daily News, which asked readers to mark a "ballot" on how they felt about taxes, reported the largest response to any mail poll it has ever conducted. More than 117,000 replies overwhelmed the ballot counters, who reported that sentiment solidly supported sharp cuts in all taxes--property, sales and income. The Boston Herald American in a similar poll found that about 80% of responding readers backed a proposal to place a lid on property taxes at 2.5% of market value. A bill to do just that was introduced in the Massachusetts legislature by four Republican lawmakers.

Politicians with elections soon ahead of them were especially quick to pick up the antitax cry. Seeking to unseat Massachusetts' Democratic Governor Michael Dukakis, who has been tightfisted himself. Republican Candidate Edward F. King is pushing an amendment that would put a cap of 9% of total personal income on all taxes levied in the state.

In Texas, Democratic Gubernatorial Candidate John Hill, the state's attorney general, declared: "It's time for us to take our medicine and cut spending." His opponent, Republican William Clements, called for a "holy war" on taxes.

In New York, the rhetoric was no less fervid. Republican Perry Duryea, minority leader in the state assembly, is proposing a freeze on local tax rates as he opposes Democratic Governor Hugh Carey's bid for reelection. Duryea also proposes cutting state taxes by $2.2 billion (20%) over four years. Carey, meanwhile, is trying to portray himself as a tightwad and his G.O.P. foes as big spenders. Accepting his nomination last week, Carey denounced "the wretched record of Republican recklessness" and asked: "Who raised taxes eight times in 16 years? They did. And who cut taxes by a billion dollars in the last two years? We did."

Voters in the normally progressive Chicago suburb of Evanston rolled up a 2-to-1 margin against a property-tax increase aimed at providing an extra $2.5 million for elementary schools, which are already running a $700,000 deficit. In Ohio, Republican Governor Jim Rhodes vowed that no school in the state would be closed "even for a day." But officials of Cleveland's public schools, which are $23 million in debt, predicted that voter rejection of emergency taxes would mean that the schools could not operate for more than two weeks next September. Dallas voters had not turned down a municipal-bond issue in 25 years, but after Proposition 13, they rejected six out of 17 such issues on the local ballot. Many of the "no" votes were cast in black and Mexican-American neighborhoods, which helped defeat such "elitist" proposals as a $45 million arts facility, a $14 million pedestrian walkway, and $6.8 million for convention-center improvements.

But it was Californians who were feeling the impact of the tax revolt most directly. By voting themselves a 57% cut in property taxes, effective July 1, the angry taxpayers spurred a bitter clash of towns, counties and school districts, all clamoring for help to make up for $7 billion in lost revenues. In Sacramento, Governor Jerry Brown and the Democratic-controlled legislature were trying to decide how to speed relief to the localities from a mounting state budget surplus, now estimated at $5.8 billion.

Some local officials responded to Proposition 13 by taking a hard look at their programs and trying to trim away fat. "We've decided not to get on the doomsday wagon," said Placer County Administrator Roland Sutton. But far more officials followed the opposite course. They proposed drastic cuts in personnel and services, setting off screams of pain from those affected.

The San Francisco board of supervisors approved a "state of emergency" resolution giving Mayor George Moscone authority to lay off about 2,000 employees, eliminate overtime pay and raise some city transit fares by up to 100%. The city's celebrated cable cars will soon cost 50-c- a ride instead of 25-c-. An $11 million pay hike for 16,000 city employees was also rescinded.

In Los Angeles, Mayor Tom Bradley drew jeers from a throng of angry civil servants gathered at city hall to protest his announced cuts of 8,300 employees, including 1,080 police. So many angry workers jammed a meeting of the Los Angeles County supervisors, whose office had forecast as many as 20,000 firings, that their catcalls forced the meeting to adjourn. One woman shook her fist at the supervisors and asked: "What cuts are you people planning to make in your staff and your own salaries?" In fact, the supervisors are scheduled to get pay raises of $2,458, but they have offered to forgo them if other public employees scheduled for pay boosts will do so too.

San Diego, faced with a loss of $25 million from the $54 million it expected in property taxes, has planned to cut $600,000 from its police budget by ending community relations storefront offices and slashing its fire-inspection program by $500,000. Under budget proposals, it will save $1.8 million in transportation funds, mainly by cutting back on a dial-a-ride service for the elderly; all part-time employees on the parks and recreation staff will be dismissed; one-third of the city's 96 playgrounds will be closed.

California's local fire districts, solely supported by the property tax, will be hit especially hard. Near Sacramento, the Fair Oaks fire-protection district board ordered that layoff notices effective July 1 be sent to all of its 48 fire fighters. Says Chief Vern Rosevear, who will be sacked: "We may have one or two volunteers who can roll out on a fire, but there won't be too much fire fighting done."

The most common cutbacks at the local level have been made by the state's 1,046 school districts. Many have canceled summer schools, raising protests among educators, who claim that the sessions are indispensable for students who need remedial help to keep up with classmates. Teachers are no less pained; summer schools have meant extra pay for thousands of them.

Proposition 13 pinches the schools hard because the property tax contributes heavily to their annual operations (about half of the $1.4 billion spent by Los Angeles schools each year, for example). Yet the teachers' loud complaints may be premature. California school districts spent $8.2 billion in all last year, and Proposition 13 will cause a $2.86 billion cut --about 35%. But State School Superintendent Wilson Riles is trying to persuade the legislature to earmark more than $2 billion of the state surplus for education. If he succeeds, the net impact on schools will be a cut of only 10% or so.

What will Sacramento do? Governor Brown has proposed measures to cut state spending by $715 million, which would be channeled to lower levels. "We're cutting into the bone and marrow," said Brown. On top of a previously announced ban on hiring, he called last week for a wage freeze for all state workers, a 9.8% general cut in all state operating expenses, and a $256 million slash in state support for health and welfare programs. The legislature may cut deeper into Brown's budget than he wants, reducing the money available for a state arts council, his powerful consumer affairs department and the state energy commission. The cuts will mean that there will be no repeat of such past grants as $1,000 for creating an underwater instrument to serenade whales and dolphins off the coast north of San Francisco, and $700 for a group to stage plays in laundromats.

A general agreement on how to disburse the state surplus seems within reach. The schools are likely to get the $2 billion they are seeking. Another $2 billion, plus whatever extra Brown can save from the budget, may be distributed among special local districts and counties. Beyond that, Brown wants to set aside $1 billion for a loan fund to meet local cash-flow problems. If agreement is reached, it would only be a stopgap solution for the first year of the crisis. Since Proposition 13 prevents future local taxes from rising beyond 2% a year, the real crush would come later--when there might not be a state revenue surplus.

To a great extent the increasing number of court tests, doomsday forecasts and strike threats in California are rearguard actions by embittered officials who want to punish what some call the "pointy-headed voters" for creating economic chaos. But voters elsewhere seem ready to create the same sort of situation. In the wake of Proposition 13, the Charleston Daily Mail asked West Virginians in a poll: "Would you approve abolishing a large chunk of state taxes knowing that it would mean curtailment of many public services?" The result: 552 said yes, 38 no. Plainly, voters across the U.S. have found a club, or a two-by-four, to drive home a message. No matter how vague the message may be--Which services should be cut? By how much? --the rebellious voters of '78 do not seem likely to relinquish that club easily.

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