If it isn’t already taxed, the spending lobby probably wants it to be. And if it’s already taxed, how about a higher tax?

At least $14 billion worth of additional taxes are being pushed by the spending lobby, led by public employee unions that will resist more cost-effective delivery of public services and improved financial management to eliminate waste and inefficiency in the face of reduced spending to deal with an unprecedented budget deficit. The budget hole through the 2002-03 fiscal year ending June 30, 2003 has been estimated at $15 billion-plus.

From the property tax on cars and commercial property to taxes on gasoline refineries, soft drinks and alcoholic beverages, a bevy of new or higher taxes has been proposed for Californians.

Whether any of these tax hikes occur remains to be seen. Even staunch supporters see uphill climbs during an election year with a governor who has stated repeatedly that the budget can be balanced without new taxes.

That hasn’t stopped the spending lobby – and their legislative allies such as Senate President Pro Tem John Burton, who is carrying a bill to raise more than $3 billion a year from more taxes on high-income Californians. Another legislator wants to restore the state’s car tax to 2 percent of the value of a vehicle when annual registrations are paid, which would increase taxes on California motorists by some $4 billion a year.

A split-roll property tax, advocated by public employee unions, the California Federation of Teachers and lobbyist Lenny Goldberg of the labor-funded California Tax Reform Association, would tag owners of commercial property with about $4 billion in higher taxes.

Those are some of the big-ticket proposals for higher taxes that have surfaced in recent months. April and May will be tense times in the governor’s Department of Finance, which will count the number of income tax dollars coming in and come up with a fresh economic forecast. These figures will drive the governor’s revised budget proposal, which is due May 14, about six weeks before the start of the new fiscal year.

Public opinion polling, such as the Field Institute in December, found that 60 percent of Californians believe their tax burdens are too heavy. Twice as many Californians believe government should reduce spending rather than raise taxes.

Trying to overcome public opinion and election-year vows of tax celibacy by the governor and others, the spending lobby has contributed millions of dollars to legislative campaigns. Public employee unions, along with allied groups that represent interests of the aged, disabled, poor and medically needy, will hold press conferences, raising the decibel level of their concerns for fewer tax dollars for their programs.

To keep his no-new-taxes position, the governor will also have to stick to his January pronouncements that put on notice those who have thrived on government programs during recent boom times. They’ll just have to tighten their belts, he has said in so many words.

According to the spending lobby’s primary tax lobbyist, Mr. Goldberg, his proposed package of tax hikes and suspended tax cuts would produce about $10 billion in additional revenue. They include Senator Burton’s “soak-the-rich” income tax plan (he contends rich folks have benefited so much from federal tax cuts that they should be more than willing to pay more state taxes); a split-roll property tax (changing the law to force more frequent change-of-ownership reassessments of commercial property), and an oil severance tax. Some of these items should ring familiar, as they were part of Mr. Goldberg’s Proposition 167, a $5 billion tax-hike initiative that was rejected by 58.1 percent of voters in November 1992.

Actually, the Legislature did temporarily impose higher income tax brackets and suspend the NOL carryforward a decade ago, but the revenue from those efforts did not match expectations. Critics of the increases noted that the tax increases (supposed to raise about $7 billion) of the early 1990s fell short of that revenue target as the economy deteriorated into the worst recession since the Great Depression.

On one hand, Senator Burton, Assembly Speaker Herb Wesson, Mr. Goldberg and Mary Bergan, president of the 100,000-member California Federation of Teachers, among others, say it would be irresponsible not to seriously consider additional revenue sources along with some spending reductions. However, critics wonder how the teachers’ unions advocate tax increases on everyone but themselves by not suggesting repeal or suspension of the teachers’ tax credit, worth hundreds of millions of dollars.

On the other, Governor Gray Davis, among others, believes it would be irresponsible to raise taxes at a time when the economy needs to be stimulated. He has vowed to neither propose nor advocate higher taxes. His spokesperson, Hilary McLean, responding to the drum-banging of Ms. Bergan at her union’s recent convention, told The Sacramento Bee: “We should be doing everything we can to stimulate the economy. A tax increase is not the way to do it.” Soon after the March 5 primary election, the governor told the editorial board of the San Diego Union-Tribune: “I want to give you every assurance that taxes will not be increased. That is my strong belief. I do not want to. I’ll do everything I can to resist the need to raise taxes.”

The Bee also interviewed Bruce Cain, director of the Institute of Governmental Studies at the University of California, Berkeley, who said the “timing” for higher taxes “is about as bad as it gets.” He said it is unlikely that the governor – who is “pretty conservative on tax measures anyway” – will give his political enemies the opening of an election-year tax increase. “He’d rather be accused of accounting tricks” to balance the budget, Mr. Cain observed.

The governor is banking on a rebounding economy producing healthier revenues from existing taxes, along with a strategy of reducing spending in a number of programs that helped boost state spending more than 35 percent from 1999 through 2001. Much of the budget hole would be filled by borrowing from the future, refinancing state bond debt to reduce the short-term strain on the general fund but increasing spending obligations down the road.

The Democrat governor may or may not be annoyed by the pressures being applied by his natural constituencies – public employee unions, including teachers – to raise taxes. They can hardly argue for higher taxes when the state’s powerful economic engine is bringing in tax dollars faster than they can be spent, and this government can spend them in a hurry. The spending lobbyists – who generally oppose any reduction in tax revenue, even during boom times -- undoubtedly see this fiscal crisis as an opportunity that only comes during hard times, when the flow of revenues to fund an $80 billion general fund are constricted. However, even serious talk of major tax increases can have an adverse impact on California’s economic recovery.

Threats of higher taxes are coming from a number of legislators whose bills would levy new or higher taxes on upper-income taxpayers, oil refineries, tobacco products, and both alcoholic and non-alcoholic beverages. In addition to legislative proposals, a state agency has decided to impose additional taxes on carriers of workers’ comp insurance.

These efforts come on the heels of significant increases in employer workers’ compensation costs and impending unemployment insurance tax increases, a delayed fuse that will strike businesses in years ahead. Furthermore, Governor Davis has promised to sign additional unemployment insurance benefit legislation. And he is sponsoring legislation to conform to federal tax law in areas that increase tax burdens on some taxpayers. All of these measures will increase the costs to operate a business or live in California.

This pro-tax activity has occurred within weeks of Governor Davis’ comments that his budget-balancing plan does not require higher taxes and that he will neither propose nor advocate them. The governor has not shut the door on higher taxes in the future, however.

Mr. Goldberg provided the Legislature with his “Revenue Options for the Budget Crisis,” dusting off earlier proposals of a decade ago or longer. He also includes a major state-federal conformity proposal on estimated tax payments that is already being pursued by the governor. Here is what he proposes:

Split Roll. Commercial and industrial property would be reassessed to current market value when at least 50 percent of ownership shares change hands, increasing property tax revenues by as much as $4 billion.

Soak the Rich. By adding 10 percent and 11 percent brackets to personal income taxes, as proposed by Senate President Pro Tem John Burton’s SB 1255, the state could raise $3.1 billion in revenue. Such higher brackets were imposed between 1991 and 1995 by the Legislature and then-Governor Pete Wilson, a Republican, whose compromise was to raise $7 billion in taxes along with spending cuts, transfers and borrowing to erase a $14 billion deficit. He was immediately attacked by Democrats for raising taxes.

Oil Severance Tax. A severance tax of 4 percent to 6 percent, based on sales price, on oil from California wells would increase revenues by $150 million to $300 million. Mr. Goldberg also wants to eliminate the percentage oil depletion allowance, the manufacturers investment tax credit for refineries, and intangible drilling allowances, which combined would increase revenues by $78 million.

S Corporations. Large corporations with receipts of more than $20 million would not be able to file as S corporations, raising taxes by $570 million.

Suspended Tax Incentives. A two-year suspension of net operating loss carryforward would result in a first-year tax increase of $780 million, plus more than $600 million over the next two years. Suspending the research-and-development tax credit and the manufacturers investment tax credit would raise taxes by $700 million.

Estimated Tax. Conforming to federal law by raising estimated tax payment requirements for personal income taxes to 90 percent of liability (up from 80 percent) would spike revenues by $210 million in the budget year ahead. This revenue-raiser was among the governor’s budget-balancing proposals announced in January.

Banks and Bad Debt. Another conformity measure that increases taxes in California, by $250 million in the first year, would adopt the federal accounting method for bad debt reserves, phasing out banks’ ability to have reserves for bad debts.

Taxpayer Elections. A $30 million gain of revenue would result from requiring state taxpayers to use the same elective options that they choose in federal tax returns. This Davis-backed proposal, which is in AB 1122 (Corbett) and SB 657 (Scott), could affect millions of California taxpayers who, because they have little or no mortgage deduction, file a federal return with itemized deductions and a state return with standardized deductions.

Revenue-Raising Conformity. A conformity proposal would deny deductions for executive compensation, club dues and lobbying expenses, worth $23 million. In addition, conforming to 1998-2000 federal tax law changes would produce $18 million in on-going revenue gain.

Mortgage Interest Deduction.  A $47 million annual tax increase would result from limiting the mortgage interest deduction to $50,000 in total interest.

Foreign and Out-of-State Investments. Changing rules for foreign investments, eliminating the deductibility of certain foreign tax payments, and applying water’s-edge election to Puerto Rico and other U.S. possessions, would each raise taxes by about $10 million.

Here is a roundup of tax-hike legislation introduced in the Legislature, or pending introduction:

Oil Refinery Tax. Introduced by Senator Nell Soto, SB 1994 would impose a 30-cents-per-barrel tax on crude oil refined in California, with funds used to clean up pollution and improve air quality. The bill refers to the tax as a fee and, according to the Legislative Counsel, can pass the Legislature by majority vote.

Tobacco Tax. Earmarking funds for the Tobacco Use Reduction and Compensation Fund, Senator Deborah Ortiz’ SB 1890 increases the cigarette tax by 3.5 cents a cigarette (70 cents per pack) and makes equivalent increases in taxes on other tobacco products.

Alcoholic Beverages Tax. Senator Gloria Romero’s SB 1417 declares legislative intent to impose a “fee” – not yet specified in the bill – on retailers selling alcoholic beverages. According to newspaper accounts, the author plans to amend the bill to require a tax on each serving of alcohol, a so-called tippler tax. The bill cites the Sinclair Paint decision of the state Supreme Court to avoid a two-thirds vote requirement for a tax increase.

An article in the Pasadena Star-News (March 10) quoted Jeff Becker, president of the Beer Institute in Washington, D.C., as saying the bill could backfire because of the “economic ramifications” of higher taxes. He said an increase in the federal alcohol tax resulted in a loss of 30,000 workers in the wine and spirits industry.

Soft Drinks Tax. Citing soft drinks as a major cause of obesity, Senator Ortiz introduced SB 1520 to help finance anti-obesity programs. The bill would impose a 10-cent tax on two-liter bottles of soda, as well as taxes on other soda products.

Sean McBride of the National Soft Drink Association criticized the bill as “unfair to single out one consumer product and earmark it to fund programs that the state general fund should cover.”

Soft drinks are already singled out for excessive tax as the only non-alcoholic beverages subject to sales tax. Higher taxes on soft drinks could prove extremely unpopular. In the early 1990s, the Legislature imposed the sales tax on candy and snacks. The public was outraged and the tax was repealed.

Income Tax Hike. SB 1255 (Burton) would increase personal income tax (PIT) revenue by adding 10 and 11 percent brackets. The highest rate is now 9.3 percent, among the highest in the nation. California’s personal income tax is considered the most progressive in the nation, with the state’s low-income to middle-income citizens paying no or relatively little tax. This legislation might not increase state revenue to the degree anticipated by its supporters. The last time these high brackets were added, income tax revenues actually dropped well below estimates.

Junk Food Tax. Assembly Member Wilma Chan told the San Francisco Chronicle that she will introduce a bill requiring a study to determine whether a tax on “junk food” should be passed to subsidize children’s dental care. “There are many questions, such as what foods and how high of a tax, but it is something we should take a serious look at,” she said.

Car-Tax Rollback. Although a rollback of the car-tax cut is deemed too unpopular for most legislators and the governor, Senator Burton and Assembly Member Carole Migden are major proponents. Ms. Migden’s AB 1753 would repeal the 67 percent reduction in vehicle license fees (the property tax on cars and trucks). The average motorist saves $124 a year from the tax cut that was phased in over three years.

Meanwhile, on the administrative front, a state Department of Insurance ruling, announced February 25, exposes carriers of workers’ compensation insurance to costs that could exceed $100 million, according to Mark Webb, vice president for state affairs of the American Insurance Association (AIA). The department decided to collect taxes on deductible payments for tax years back to 1997. The ruling that such payments are premiums subject to the gross premiums tax has been challenged at the Office of Administrative Law. The AIA contends that the department’s action constituted adoption of a regulation without proper notice and public hearings in violation of the Administrative Procedures Act.

Mr. Webb said the additional tax will result in considerable costs to all businesses in California.

The State Board of Equalization, interpreting last year’s legislation designed to stimulate the California agricultural economy, has tentatively decided to side with farmers who want a broad definition of a sales tax exemption for diesel fuel. However, the Davis administration wants the exemption tightened to apply only to fuel used up to the point a grower turns over the product, which would raise $50 million in revenue. Legislation, SB 10XXX, by Senator Byron Sher is designed to preempt the BOE.