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WILSON WANTS SMALLER 3RD-GRADE CLASSES.

Byline: Mark Katches Daily News Sacramento Bureau

Having given up hope that he can get an across-the-board personal income tax cut, Gov. Pete Wilson on Monday proposed a new round of funding increases for schools.

Wilson said he wants to take the money that would have been spent on a 15 percent personal income tax reduction and channel part of it into reducing class size for third-graders.

Press secretary Sean Walsh said the governor's new plan would amount to $218 million for third-grade classrooms.

Wilson said he has realized that he cannot get the income tax reduction because of strong opposition in the Democrat-controlled Senate.

``The Democrats are dead-set opposed to giving any kind of personal income tax relief,'' Wilson said in an interview with a Bay Area radio station. ``That being the case, then I will insist that the money that is going to be spent be spent to lower class size in grade three.''

At the same time, Wilson has hardened his line on business tax relief. Last week, Wilson was willing to reduce his 15 percent across-the-board tax cut for corporations down to 12 percent phased in over three years.

Now, however, he wants the full 15 percent this year - an estimated $340 million tax break for businesses.

``If we don't lower the bank and corporation tax a full 15 percent in one year, then we are not going to be significantly competing,'' Wilson said. ``And we're going to see jobs leave once again, and when jobs leave, revenues go down and there's less to spend for education and for everything else.''

Wilson aides signaled last week that the governor had given up on his chances to succeed with a personal income tax reduction. Over dinner Wednesday, Wilson told Sen. Bill Lockyer, D-Hayward, that he was dropping the plan after Lockyer told him that not one of the 22 Democrats in the 40-member Senate would support it.

Wilson declined to say last week that he was giving up. But aides said he already had.

The change marks a turn in the negotiations over the budget, which is supposed to take effect Monday.

Wilson appears to be trying to appease Democrats who are worried that tax cuts will reduce spending on schools.

At the same time, he is playing hardball on the issue of corporate tax relief. Democrats have said they are willing to give businesses some tax cuts because the state's corporate tax rates are among the highest in the nation.

But Democrats have the same concerns about giving up too much tax relief to businesses. For every $1 reduced in revenue, schools lose about 60 cents in funding.

The governor already has proposed spending $460 million for programs to lower class size in grades K-2 in his proposed 1996-97 fiscal year budget. The latest proposal would extend the plan to the third grade by lowering class size from an average of 30 pupils per class to 20 per class.

The personal income tax cut would have saved $79 for a family of four earning $40,000 and $436 for a family of four earning $100,000 a year.

It is the second year in a row that Wilson's plan to cut personal income taxes has been scuttled because of lack of support in the Senate.
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Publication:Daily News (Los Angeles, CA)
Article Type:Statistical Data Included
Date:Jun 25, 1996
Words:549
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