Governor Rejects Tax Break Bill for Earthquake Victims

SACRAMENTO —  Governor Pete Wilson on Friday vetoed a bill that would have provided an additional tax break to victims of the Northridge earthquake.

The bill would have allowed taxpayers to deduct all uninsured quake losses of more than $100 from state taxable income. Supporters of the bill said this would have provided as much as a 22% state tax cut for some quake victims. Currently, such deductions are limited to the amount over 10% of the taxpayer’s adjusted gross income.

“The state has already provided tax relief to earthquake victims in the amount of $300 million in income tax relief and a substantial amount in property tax relief,” Wilson said in his veto message. “While I am sympathetic to the financial hardship incurred by victims of the earthquake, this bill would offer only illusory relief.

“At a minimum, this bill is premature, and would excite false expectations.”

Wilson earlier this year signed legislation that would allow quake victims to deduct losses from their income on tax returns spread out over the next five years. The governor also issued executive orders allowing property taxes to be assessed on the lower, post-earthquake value of damaged property.

But the bill vetoed Friday, sponsored by state senator Herschel Rosenthal (D-Los Angeles), would have eliminated limits on the amount of losses that could be deducted.

“Wilson’s action is a terrible blow to taxpayers in the San Fernando Valley and other areas that have suffered losses as a result of this quake,” said Rosenthal in a news release issued after the veto.

The state senator said the veto could affect a vote on a similar federal bill now pending.

“His veto has essentially made it impossible for the federal companion bill to pass,” Rosenthal said in the release. “Why would a congressman from Minnesota care about California when California’s own governor doesn’t think that this tax break is important?”

Dan Flynn, an aide to Rosenthal, said the legislator would reintroduce the bill next year.