California to give $1.1 billion back to taxpayers

By KEN HOOVER   |   Sept. 21, 1987

SACRAMENTO, Calif. -- Gov. George Deukmejian Monday signed into law the largest tax rebate in California history -- a $1.1 billion refund in surplus state money that will put checks of up to $236 in the mail to income taxpayers by Christmas.

The bill, introduced by Assemblyman Gary Condit, will give individual taxpayers a maximum rebate of $118.

Couples filing jointly will receive checks for up to $236. The average rebate check for taxes paid in 1986 will be $93.

'I think we can be very pleased that we were able to protect this money for the taxpayers and that we have honored the spending limit enacted by the voters through the initiative process,' Deukmejian said at a brief bill-signing ceremony.

Under Proposition 4, approved by voters in 1979, the state was prohibited from expending the $1.1 billion, the amount by which the spending limit set by the tax reform initiative was exceeded.

However, a legislative debate over what form the rebate should take raged for months after the spending ceiling was exceeded for the first time in the 1986-87 budget.

The hard-won battle for the rebate began early this year when the spending ceiling approved by voters in 1979 was exceeded for the first time in the 1986-87 budget.

Budget analysts attributed the excess cash to changes made in the federal tax code, which induced many affluent taxpayers to sell holdings to take avantage of the expiring capital gains tax.

The Republicans, backed by the governor, insisted the money had to be refunded to taxpayers in the form of a check. Democrats countered that the money could be given to state programs, such as schools and local governments.

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