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    "ocrText": "Ronald Reagan Presidential Library\nDigital Library Collections\nThis is a PDF of a folder from our textual collections.\nCollection: Reagan, Ronald: Gubernatorial Papers,\n1966-74: Press Unit\nFolder Title: Speeches - Reports to the People, 1969\nBox: P20\nTo see more digitized collections visit:\nhttps://reaganlibrary.gov/archives/digital-library\nTo see all Ronald Reagan Presidential Library inventories visit:\nhttps://reaganlibrary.gov/document-collection\nContact a reference archivist at: [email protected]\nCitation Guidelines: https://reaganlibrary.gov/citing\nNational Archives Catalogue: https://catalog.archives.gov/\nTHE operation.\n$\n%\n1/31/19\n169\nOFFICE OF THE GOVERNOR\nRELEASE: 5 p.m. January 31\nSacramento, California\nContact: Paul Beck\nPLEASE GUARD AGAINST PREMATURE\n445-4571\n1-31-69\nRELEASE\n(Tax Rebate)\nThe following was issued as a filmed \"Report to the People\" by\nGovernor Reagan to California television stations for use after 5 p.m.,\ntoday, January 31:\n\"Two years ago we told the people of California, all of you, that\nwe were going to try to cut government's size and cost by 10 percent\nacross the board. This declaration was met with mixed emotions.\n\"Now we're going to talk 10 percent again as a result of those\neconomies, in part, and in part due to unexpected revenues as a result\nof inflation. We will have in the coming year a hundred million dollars\nover and above our budget - the budget we are presenting for this coming\nyear.\n\"Normally--with this kind of money left over--government finds a\nway to spend it. And in so doing, it usually builds up the cost of\ngovernment for years to come until eventually it has to ask for more\nrevenues.\n\"we think we're doing something a little unprecedented, but we\nbelieve you're entitled to a rebate. You should receive that hundred\nmillion dollars back. And therefore we're asking the legislature\neffective in April, 1970-not this coming April but in April 1970 when\nyou compute your income tax for the state--that you subtract 10 percent-\na 10 percent cut across the board in the state income tax for that year.\nAnd you deduct that amount and pay 90 percent of your computed tax.\"\n\"Thus we will give the money back to the people\".\n\"We're continuing with tax reform and we hope that we'll be able\nto present savings that will be on a permanent basis as we achieve tax\nreform.\n\"But as of now, this will be a one-time return to you of a hundred\nmillion dollars which you gave to the government--and which we, through\neconomies, can now return to you.\"\n##########\nare\nOFFICE OF THE GOVERNOR\nRELEASE:\n5 p.m., Tuesday\nSacramento, California\nFebruary 4\nContact: Paul Beck\n445-4571\n2.3.69\nPLEASE GUARD AGAINST PREMATURE RELEASE\nTRANSCRIPT OF GOVERNOR RONALD REAGAN'S REPORT TO THE PEOPLE\nFebruary 4, 1969\n(Budget)\nThe following stations will carry a Report to the People on the\n1969-1970 budget by Governor Ronald Reagan on Tuesday evening,\nFebruary 4.\nBakersfield\nKERO\n7:00 - 7:30 p.m.\nChico\nKHSL\n7:00 - 7:30 p.m.\nEureka\nKVIQ\n7:00 - 7:30 p.m.\nFresno\nKJEO\n9:30 - 10:00 p.m.\nPalm Springs\nKPLM\n7:00 - 7:30 p.m.\nLos Angeles\nKTLA\n7:30 - 8:00 p.m.\nSacramento\nKCRA\n7:30 - 8:00 p.m.\nSalinas\nKSBW\n7:00 - 7:30 p.m.\nSan Diego\nKFMB\n9:30 - 10:00 p.m.\nSan Jose\nKNTV\n9:30 - 10:00 p.m.\nSan Francisco\nKRON\n7:00 - 7:30p.m.\nSanta Barbara\nKEYT\n6:00 - 6:30 p.m.\nHere are the governor's remarks:\nGood evening.\nTonight, I would like to review with you the financial state of our\nstate. As taxpayers, this discussion is of great importance to all of\nus because we will be talking about how much it will cost to run our\nstate during the next fiscal year\n1969-1970.\nNow, I have here Caspar W. Weinberger, state finance director, to\njoin me in this report.\nWhen we talk about the budget, we are talking about your money\nyour tax dollars\nbecause government is not free. There's no such\nthing as federal money\nor state money. No matter who collects it--\nno matter how it's collected, it's all taxpayer money.\nI, of course, am required by the Constitution to submit a budget to\nthe legislature-- budget containing the estimated state revenues and\nrecommended state expenditures.\nBut tonight I want to do something that I am not required to do,\nbut which I feel it only right and proper that I should do. I want to\ndiscuss with you how much of your money we'll need this year and how it\nwill be spent to do the things you've asked government to do for you\nand some of the things which government has just taken on itself to do\nand how much of it will be spent to comply with federal demands and how\nsome of it will be spent because of state law.\n-1-\nThe Constitution requires me to recommend sources of additional\nmoney if we have to spend more than is available. I'm sure you will be\npleased to hear I will not have to refer to that particular provision\nof the constitution.\nWe will have a balanced budget and no new taxes.\nDuring the past two years, we've tried to apply some common sense\nto government to see if it couldn't be a little more efficient and a\nlittle less costly. We haven't done all we'd like to do but we have\nbrought the state from the brink of insolvency--when we took over-to\nthe present situation where we have sufficient funds,\nFor the first time, we're going to try and break down our budget--\nour taxes and our expenditures--and give you an explanation of what the\nstate budget really is. That's why I introduced Caspar Weinberger.\nCASPAR WEINBERGER: Governor, this is the expenditure dollar, this\nis where it goes. The great bulk of the state's money, 40 cents out of\nevery dollar that we spend goes for education. Another 25 cents goes\nfor correction, health and welfare. That's 65, just about 66 cents,\nof every dollar we spend.\nWe have, however, 14 cents out of every dollar that is in the form\nof property tax relief and shared revenues. Those are the taxes that we\ncollect for the county and return directly to them. So 14 cents out of\nevery dollar that the state has listed as spending actually goes back to\nthe county.\nAnd 11 cents of what we spend goes to highways and other transporta-\ntion matters; 2 cents for resources and all the other areas of state\nexpenditures totals 6 cents.\nThat's what the state's dollar is spent for 65 cents for these\ntwo big items right here, education, corrections and health and welfare.\nIt all comes from the taxpayers, but actually there are three major\nitems for CO llection: Sales tax brings in 30 cents of every dollar we\ncollect, personal income taxes bring in 21½ cents, and the gas taxes\nwhich go directly for highways bring in 16 cents.\nThe rest is scattered in these remaining amounts--10 cents from the\nbank and corporation tax, cigarette, motor vehicle license, the alcoholic\nbeverage tax, horse racing, insurance and inheritance and gift tax.\nThese bring in all of the rest. The big revenue producers at the sales\ntax, the personal income tax and the gas tax. That's where it all comes\nfrom.\n-2-\nGOVERNOR: Of course, the risk is, that with breaking it down\nthis way, people have a tendency to think someone else is helping pay\ntheir taxes. But all of these are paid by the people, no matter what\nthe name of the tax is. It either comes out of your pocket in higher\nprices or in the actual tax that is applied.\nThat is why--with your pocketbooks in mind--for the second year\nin a row I will submit to the legislature a bill which, if passed this\ntime, will reduce personal state income taxes in the coming fiscal\nyear\nreduce those taxes by $100 million.\nIn general terms, this will reduce your personal state income\ntaxes for 1969--with the greatest relief going to those of you who\nwere hardest hit by the unpleasant--but at that time--very necessary\ntax bill.\nIn addition, I will recommend to the legislature that approximately\n$235 million in state revenues be returned for property tax relief.\nThis, of course, is in addition to the property tax relief for which\nhomeowners are now making application and which will result in a\n$70 tax reduction this spring.\nCASPAR WEINBERGER: (Referring to charts) This is the $100 million\npersonal income tax reduction that you spoke about. It will be a new\nprogram if the legislature adopts it. It would be a voluntary return\nto the taxpayers of $100 million in the areas where the tax of '67 hit\nhardest.\nThe remaining items here are continuations of property tax relief\nat the same general levels that they were put in last year. Home owners\nwould get $183 million--and again we should emphasize these are state\nfunds going directly back to the counties for that relief. We would\ncontinue the doubling of the standard deduction of personal income\ntax which would be of particular assistance to people who rent and\ntherefore don't have an interest payment to deduct.\nThe business inventory tax reduction would be continued and we\nwould wipe out the household personal property tax once and for all.\nSenior citizens would get special property tax relief in the amount of\n$9 million. All of this adds up to $380 million of state revenues\nbeing voluntarily returned to taxpayers.\nGOVERNOR: Now once again to explain: Here is $380 million that\nshows in our budget, adds to the size of the budget, looks like an\nexpense. but actually is money that is being given back to the people.\n-3-\nThus, while WE are submitting a budget that totals about\n$6.2 billion, an increase of 3.9 percent over our revised expenditures\nthis current fiscal year, I believe we have started what we hope will\nbe a new trend in government finances---nearly $380 million of our\nincome is being earmarked for tax reduction\ntax reduction, rather\nthan for increased spending programs.\nThe money is available largely because of our own economies and\nbecause national inflation has produced more revenues than anyone could\nanticipate. It may well be that as a result of the Advisory Commission\non Tax Reform, I will be able to report some recommendations for\npermanent tax reductions, or other acceptable reforms, and if so,\nthey could, of course, take effect on a permanent basis. Meanwhile,\nI believe that you the taxpayers should be given immediate considera-\ntion and immediate relief by using funds we have now, but which may not\nbe available to us next year.\nLest anyone feel that we are blinding ourselves to our current\nand future needs, let me assure you that through prudent financial\nmanagement--and many internal economies and administrative improvements--\nwe will make it possible to continue to meet our growing needs, without\nadditional taxation and with much needed relief for our taxpayers.\nFor example, our new program budgeting system, fully adopted\nthis year for the first time in the state's history, offers us a\nsophisticated and effective management tool of great value in allocating\nstate resources among the highest priority needs.\nIn the critically important field of elementary and secondary\neducation, I am recommending a total expenditure of $1,603,000,000.\nThis is an increase in our already massive program of public school aid\nin the kindergarten through 12th grade years. It includes $105 million\nin new money, plus additional amounts to cover costs of increased\nenrollment and increased aid for the disadvantaged and gifted child.\nThis $1.6 billion is for educational programs authorized by your\nlocal school boards. If this money was not supplied by the state, it\nwould have to be raised by that much and therefore increase your local\nproperty tax.\nSince this is the biggest expenditure, Mr. Weinberger will break\nthis down.\n-4-\nCASPAR WEINBERGER: (Referring to charts) This is what we are\ndoing now. We are spending from state aid directly to the public\nschool system $1.4 billion and it is for the education of 4,940,000\nstudents. Now this year--this budget year we are talking about--we\nwill add $12 million just to continue the cost of what we are doing\nnow. That is what inflation requires. There also will be 100,000\nadditional pupils. The budget will recommend $105 million in new\nmoney to be added to that, bringing the total amount we will give to\nthe local school districts at $1,603,000,000 for the education of\n5,040,000,000 school children.\nThis extra $105 million will recognize the living cost increase\nthat the schools, along with everybody else, feels. But it also will\nbe for the employment of additional teachers in those areas of the\nstate that most need it.\nGOVERNOR: Now kindergarten through high school--what we call\nthe K-through-12 years--are vital. They should be one of our top\npriority items. For millions of children, these grades may contain\nthe total of their formal education. They must not be short-changed\nby allowing other programs to siphon away money which should go to\nthem. But we also must take some long-overdue steps to make sure our\neducation dollars are being wisely spent and that each dollar is buying\na full dollar's worth.\n-5-\nWe are establishing a Governor's Commission on Educational Reform\nto analyze root problems and to suggest major reforms in the areas of\nfinancing, teacher training, standards and salaries, curriculum, and\nthe proper functions of schools in today's society, especially in\nour urban areas.\nThe budget for higher education--for our university and state\ncolleges--deserves special comment. I am greatly concerned about the\nattacks on our educational system by small groups who are best described\nas criminal anarchists- those unruly few who want to close down the\ncampuses of our university and state colleges, and even high schools\nand I know that the vast majority of you share this concern.\nI will, therefore, continue to use every power at my command to\ninsure that safety and security--and the proper academic atmosphere--\nis maintained on every campus. I am determined that academic freedom\nand the pursuit of knowledge will be upheld, protected and preserved.\nBut I will not penalize the majority to punish the few. I there-\nfore rejected the demands of those who--for a variety of reasons-\nwould drastically cut back on funds for higher education in such a way\nas to damage our system of higher education.\nOur budget for the coming year will therefore reflect a $61 million\nincrease over this year's record budget for the university and state\ncolleges.\nAgain, let me repeat--I am proposing a $61 million increase in\ngeneral support for higher education-- for our university and state\ncollege system.\nWEINBERGER: Now Governor, that increase breaks down this way. At\nthe present time we are spending $533 million of state money for the\neducation of 261,800 college students. In the new budget that sum will\nrise by $61 million to $594 million and it will take care of 21,600\nadditional college students for a total of 283,000 students in college\nin California's public college system.\nThe breakdown shows the university will get 25 of the $61 million\nfor an additional 6,000 students. The state colleges will get 36 millio\nof the $61 million increase for an additional 15,700 students.\nThe difference, of course, is because the university-- with the\nemphasis on graduate education--is considerably more expensive.\n-6-\nThe estimates of enrollment are always based entirely on what is\nfurnished by the colleges and university themselves. This year the\nstate colleges underestimated their enrollment. So we will be picking\nup for them an additional $600,000 this month if the legislature agrees\nSO as to enable them to handle the additional students that their esti-\nmates didn't quite reach.\nGOVERNOR: Make no mistake about it. Higher education in California\nis very expensive--but a necessary and wise investment. I believe this\nincrease is necessary to insure that the growing number of qualified\nyoung people will continue to have the unmatched opportunity to experienc\nand benefit from our magnificent system of higher education.\nIn that connection, I also recommend a $5 million increase in our\nscholarship funds to insure that a family's financial condition shall\nbe no bar to participation in California's higher education.\nI also believe an equal education plan is necessary to achieve full\neducational opportunity for all qualified students in California, to\nprovide supplemental capital for each campus, and to eliminate existing\ninequities so that low income families will not have to bear a dispro-\nportionate share of the cost of higher education.\nTherefore, because I feel the taxpayer needs a break--and because\nI believe that we appreciate and work harder for those things which are\nnot given to us for nothing-- I will continue to support measures to\nestablish some form of tuition at our state colleges and university.\nIn the general area of concern we all have for the less fortunate\nin our state and communities, I am recommending major increases in the\nlocal assistance portion of the budget for the treatment of mental\nillness much closer at home (and, we believe, much more effective and\nacceptable treatment for patients and their families).\nThe Department of Mental Hygiene's budget alone will total more\nthan $265 million, up $28 million from the current budget.\nFor more than a year now there have been false and somewhat hysteri\ncharges that we were placing dollars above human beings--particularly\nin the area of mental health. I hope now and with this year's budget\nthat it will become plain to those who made those charges that at no\ntime were we concerned solely with economy. We were making certain\neconomies in order to clear the decks to continue with the advance of\nmental hygiene in such a way as to make California what it is: The\nnumber one state in the treatment of the mentally ill.\nThe new budget will include:\n1. An increase of $22,800,000 over last year's budget for funding\ncommunity mental health programs. The increase will bring the total\nstate's share for community mental health programs to about $54 million\nfor the coming year. The state budget for community programs was only\n$18.6 million two years ago.\n2. An increase in the presently authorized level of care in the\nhospitals for the mentally ill by the retention of 547 nursing and 13\nrehabilitation therapist positions which would have been abolished in\n1969-70 because of the decreasing number of patients.\n3. An additional 175 hospital worker positions to relieve psychia-\ntric technicians and registered nurses of housekeeping and other chores.\n4. An additional 63 psychiatric technician positions and,\n5. 100 additional maintenance positions.\nMany of these and other increases are--I believe--necessary and\nbeneficial. We are proposing these increases voluntarily because it\nis the right and proper thing to do. Other increases are mandated--\nvirtually imposed on us from other quarters as we will see in more\ndetail in a few moments. These include the federal government's role--\nespecially in welfare and certain related health care services.\nIn this budget, for the upcoming fiscal year, I have also included\nsufficient funds to provide a 5 per cent increase in salaries of state\nemployees including our university and state college professors and\nteachers. This is less than some have recommended, and more than many\nhave urged. Just as inflation has raised prices for all of us, and our\nincomes go up accordingly, so is this true of our state employees.\nBy the same token, the people of California have a right to expect\nthat there will be the same full measure of devoted service in the\nfuture that the vast majority of our state employees have given in the\npast. Needless to say, unwarranted and illegal strikes by a small\nnumber of public employees can only make it more difficult for us to\nsecure proper public recognition of the legitimate needs of the vast\nmajority of loyal and dedicated civil servants.\nIn discussing out state budget--which as we have seen, will be\nslightly over $6 billion this year there are a number of facts which\nwe must keep in mind.\nOne is that I, as your governor, have control over only slightly\nmore than one third of the total budget. Over the years, special--\nalmost untouchable--programs have developed which have been locked into\nour Constitution and laws. They are untouchable in that \"X\" amounts of\nmoney are collected and set aside for specific programs--and only\nthose programs no matter what emergencies may arise nor what changes\ntake place in the economy. This makes priority setting and financial\ndecision-making most difficult. It also makes government more expensive\nNow a change--allowing your elected officials to determine fi-\nmancial priorities and allocate more of the money which is on hand is,\nI believe, necessary.\nSuch a change would not only guarantee lower overall spending,\nbut it would remove the unfeasible guarantee we now have that each\nbudget will be higher than the last.\nWe should also bear in mind that the state does not spend, in the\ngenerally understood sense of the word, more than about 1.7 billion\nof\nout of the total / some $6 billion, for the general operation of state\ngovernment which fall within the responsibility of the governor. In\naddition to these operational expenses, we will spend about $90 million\nfor new construction financed from our general fund and about $770\nmillion in other construction financed from bond issues that were passed\nsome years ago, and by gas tax money for highways.\nNow I think this is another situation where we can receive some\nexplanation of some charts.\nWEINBERGER: Here is that last sum of those two sums you were just\ntalking about. That is the $1,722,000,000 that is spent out of the\n$6.2 billion for the actual operations of the state government. This\nlittle wedge down here is the $861 million in capital outlay. Actually,\nonly $90 million of that is disbursed under your immediate direction\nbecause that balance of $700 odd million over here comes from bond\nissues that came from the water program enacted several years ago,\nparks, and highways out of the gas tax money and so on.\n-9-\nThis, however, is the amount actually spent by the state government out\nof the $6.2 billion. The balance over 'here is what goes to the local\ngovernment and some of the programs that are frozen and dedicated that\nyou mentioned a moment ago.\nOne point six billion dollars\nis the aid to public schools. Then we add in\n$1,000,098,000 for welfare, mental health and Medi-Cal. These are all\nexpenditures which go to assist local government to meet its obligations.\nThen there are taxes that the state collects--$595 million--and returns\nto local government. We just act as an agent on those.\nAnd here is a new and novel item. This is tax relief money that\nthe state collects and sends back. There are also other forms of local\nassistance--some additional license fees that are returned and so on.\nSo out of this whole total, the $6.2 billion budget which is\nsubmitted by you to the legislature, state government actually only\nspends about $2.6 billion. The rest of the total goes directly to\nrelieve local government from its obligations, which cf course helps\ncut the property tax locally, and for direct property tax relief.\nGOVERNOR: It'll be a lot easier for the people to understand if\nsomeday the state budget could actually be divided to show what the\nstate government actually costs and then show the other areas not as\nexpenditures, but as areas where we are simply collecting money to give\nback to the local government. We're a tax collector for the local\ngovernment.\nWEINBERGER: Well the only difficulty, Governor, is that if we\nstarted this year, everybody would say that we were being terribly\ndeceptive. This is the way it's been done for years and years. So the\nonly real way, I suppose, to show it, is to show that it isn't really\none big piece of pie, or one dollar; it really is two.\nIt's what the state gets and what it gives to local government.\nGOVERNOR: Now what you've seen explains why budgets just have to\nincrease. That portion of the budget which goes to provide assistance\nto local governments will increase about 14 percent. On the other hand,\nthe state operations, that part of the budget, will increase only\n7 percent--just enough to keep up with the growth in population plus\ninflation.\n- 10 -\nIn general, we've managed to hold our total expenses down to the\nmodest increases recommended here because we have most carefully\nscrutinized requests for new or expanded programs. We have approved\nsome $26 million in new requests and here I'll ask Cap to show those\nto you.\nWEINBERGER: Some of those programs, governor, are set forth on this\nchart. As you know, we cut $400 million in other requests. Programs tha\nwill cost more include the improved care of the mentally ill that you\nmentioned. We're going to put into force the statewide criminal justice\ninformation system that will get information back and forth more rapidly.\nWe'll increase the public health efforts in the pollution fields and\nthe testing of new drugs. We're going to approve a much higher standard\nof water quality. There are programs for new educational opportunities\nand employment opportunities for the disadvantaged. We have money in\nfor a new smog laboratory; we have money in to try and help predict\nearthquakes and geologic hazards. We're going to go after the forest\nfires much harder this year, and we have continued protection by authori-\nzing the continuance cf the BCDC for San Francisco bay fill.\nGOVERNOR: And, as we have seen, we have increased the support for\nother programs in the amount we needed to keep pace with our growth.\nWe will continue these efforts. What's more, it is not enough just\nto present this budget with its surplus and its proposals for meeting\ngrowth and for tax reduction.\nYou should also know that much thought has been given to the budget\nfor the year 1970-71 at the same time this budget was being prepared.\nIn effect, we really prepared two budgets at once, because it would be\ndoing the state small service to balance one budget without new taxes,\nand leave a wide deficit for the next fiscal year.\nTherefore, I can also assure you that--through the continued\napplication of sound business practices in the administration of your\nstate government--and with the cooperation of the legislature--we will\nagain present a balanced budget for next year--and again without a tax\nincrease!\nWe've resisted great pressures to add more new programs which would\ncost more money and skyrocket the total cost of government.\n-11- -\nSurpluses always offer a great temptation for spending, but the\nsurpluses we project are no more than safe margins against the possibility\nof a change of economic conditions, or the imposition of additional and\nexpensive federal requirements and rules. For example, just this year\nwe'll have to pay $52 million more of your money than last year, simply\nbecause of changes by arbitrary federal welfare policies.\nThere are also other changes. There are some, for example, who will\nsay that there are higher priorities for spending than tax relief, althoug\ndoubtless they will not phrase it so bluntly.\nFor the record--let me say here and now that in my opinion, tax\nrelief is not only a necessary priority-- it is an absolute necessity.\nAnd here's why:\nWEINBERGER: Governor, this (chart) shows California in 1969, last\nthousand three hundred fifty dollars\n(fiscal) year.\nOne /was paid, that's man, woman or child, so a family\nof four is paying about $5,000 a year for government.\nGOVERNOR: Actually, that's $5,400.\nWEINBERGER: Yes, you've got a computer which I haven't. The\nfederal government takes $870 of that, This shows that the state taxes\nare $243 out of that $1,350, but $138 of that was returned to local\ngovernment by the state and as we saw a moment ago, more will be returned\nout of that $243 next year. The rest of this is city, county, school\ndistricts and special districts; $1,350 for each person in California.\nGOVERNOR: Thus, my promise to you is this-based on the balanced\nbudget we have discussed tonight--I will:\n1. Send the legislature my request that they approve a measure to\nreduce your personal state income taxes for the coming fiscal year--by\nthe sum of $100 million.\n2. Continue the doubled standard deductions to save you another\n$45 million.\n3. Urge the legislature to return approximately $235 million in\nstate revenues to local government for property tax relief\nthus\nproviding an overall tax reduction program totaling nearly $380 million--\ninstead of increasing the cost of government.\nThis balanced budget--with its provisions for tax reductions-- a\nvery real accomplishment. But there is still much more to be done.\nGovernment still costs all of us too much money. There remain too many\nprograms--thrust upon us as hold-overs from the past. We must continue\n-12-\nto reform to cut and squeeze and trim. We must continue to replace\nthe outmoded with the new; the outworn with the relevant. We must\ncontinue to reassess the priorities of the people and to assert new\npriorities for government, priorities which will meet the needs of a\ndynamic, modern society.\nWe have a fiscally sound state government: prudence must be the\nconstant companion to progress. We can meet our real needs and still\nfurnish necessary and long overdue tax relief to you.\nThis is what you want\nthis is what Cap wants, what he has\nworked very hard for. This is what I want.\nThank you\nand good night.\n#########\n(NOTE: The above text may vary slightly from the actual televised\nreport. However, Governor Reagan will stand by the above.)\n-13-\nprovide\n15\nM\n(COY-TV\nShowing on May 11th at 11:30 PM\nSANTA MARIA\nKRCR-TV\nShowing on May 11th at 7:00 PM\nREDDING\n(RED-TV\nShowing on May 11th at 11:00 PM\nSAN FRANCISCO\nKTVU-TV\nShowing on May 18th at 1:30 PM\nDAKLAND\n(FRE-TV\nShowing on May 11th at 11:15 PM\nFRESNO\nKOGO-TV\nShowing on May 11th at 7:00 PM\nSAN DJEGO\nKERO-TV\nShowing May 11th at 8:30 PM\nBAKERSFIELD\n***\nTLA-TV\nShowing on May 25th at 5:00 PM\nLOS ANGELES\n(JEO-TV\nShowing on May 12th at 11:30 PM\nFRESNO\nKCRA-TV\nShowing on May 11th at 5:00 PM\nSACRAMENTO\nXTV\nShowing on May lhat 4:00 PM\nSACRAMENTO\nKNEW-TV\nShowing on May 11th at 11:00 PM\nSAN FRANCISCO\nKEMO--TV\nShowing on May 12th at 2:00 PM\nSAN FRANCISCO\nKUDO-TV\nShowing on May 16th at 4:00 PM\nSAN FRANCISCO\nKNBC-1V\nUnable to show May 11th, will advise\nLOS ANGELES\nof scheduled showing at a later date\nKABC-TV\nCannot show as.a special program due\nof\nLOS ANGELES\nto tight schedule. will show on naws spote\nCHSL-TV\nShowing on May 11th at 2:30 2: PM\nCHICO\nOFFICE OF THE GOVERNOR\nRELEASE: 4 P.M., SUNDAY, MAY 11.\nSacramento, California\nContact: Paul Beck\nPLEASE GUARD AGAINST PREMATURE\n445-4571\n5-9-69\nRELEASE.\nTRANSCRIPT OF GOVERNOR RONALD REAGAN'S REPORT TO THE PEOPLE\nMay 11, 1969\n(Tax Reform)\nGOVERNOR REAGAN: I would like to discuss with you a subject\nwhich is important to all of us taxes and tax reform that is,\nreforming, reorganizing and equalizing the tax burden which, over the\nyears, has become a major burden on a disproportionate share of the\ntaxpayers.\nJoining us are Caspar W. Weinberger, director of our State\nDepartment of Finance, and Assemblyman Craig Biddle of Riverside, who\nhas introduced this administration's two-part tax reform package.\nCap, Craig, and I want to discuss this program with you because\nI think in this way, we can all get a clearer picture of the basic\nprinciples and goals of the tax reform program.\nOver the years, California's tax structure has become encrusted\nwith add-ons and off-sets. Most of these have been precariously\nbalanced one side against the other, like a teeter totter, so that an\nattempt to correct one fault, or one evil, often results in setting off\na complicated chain reaction.\nBecause the tax structure has grown--often without apparent\nrhyme or reason, much less proper planning-- the taxing system has\nbecome unfair, with a large percentage of the taxpayers paying more\nthan their fair share.\nIt is this situation which we must correct and in this discussion\nit is important to remember we are talking about tax reform, not tax\nincreases, not tax reduction. We have already started on tax reductions\nand, as you know, there is $380 million of tax relief in the new\nbudget. But, tax reform is something else: Revising the existing tax\nburdens so that they are more evenly and more fairly distributed among\nthe taxpayers, among private citizens, and among the businesses, the\ncorporations and companies doing business in California.\nThere are certain basic objectives which we must seek to achieve\nthrough a tax reform program. Let's talk about them for a minute.\n-1-\nWe want a fair and balanced tax system; meaningful property\ntax relief, an increased state role in quality education, greater\nflexibility for local school districts and, no total increase in\ntaxes.\nLet me repeat that. This must be done without increasing the\ntotal tax burden in California. Contrary to what some have claimed,\nand inferred, we are not proposing a tax increase. We are proposing\ntax reform a redistribution of the burden from those who have been\npaying much more than they should to a broader base of taxpayers,\nincluding some who have not been paying their share. As in any shift,\nsome individual income taxes will go up. Some property taxes will go\ndown. But, there will be no overall tax increase no more money paid\nto or for government.\nWe are proposing a two-part tax reform package which, as I mentioned,\nAssemblyman Craig Biddle has introduced in the Legislature, on behalf\nof this administration:\nCraig, why don't you and Cap review the concept of the immediate\nand long-term proposals which we might refer to as Phase I and Phase 2\nof the program and then highlight the major points of emphasis in\nPhase 1.\nCRAIG BIDDLE: Well, of course the magnitude of the program is\ngoing to require a constitutional amendment, so this will mean we will\nhave to place it on the ballot for voter approval in the General\nElection of 1970. And all of the constitutional amendments which will\nbe included in Phase 2 will be placed before the voters at that time.\nPhase 1 will only require legislative action and can be approved\nby the Legislature during this session without voter approval.\nThe first portion of that phase, which I think is very important,\nis increasing the amount that was allowed as an exemption on real\nproperty tax last year. We placed on the ballot, of course, 1-A which\nwas approved by the voters. That is, the $750 exemption on real property.\nThis proposal is to increase that, of course, to $1,000 and make it\nidentical to the veterans' exemption, and this would mean to the average\nresidential householder in California $100 off his residential property\ntax next year.\n?\n- 2 -\nCAP WEINBERGER: Then, the other portions of our program that can\nbe done this year would be the very vital necessity of a thing we tried\nto do last year, Governor, of reducing, or going back to, this method of\npersonal exemption in the income tax, rather than this credit system.\nIf we do that, if we give a personal exemption of $600 for each\ndependent, it will remove a very substantial inequity that was experience\nin the income tax last year, particularly with middle income families\nwith a large number of dependents.\nThe other thing that we want to do, and ought to do just as soon\nas possible, is reduce this business inventory tax by over 50 percent.\nAnd we can do that this year, if we eliminate some of these unwarranted\nsales tax exemptions such as, for example, the sale tax on containers.\nThe business inventory tax is one of the worst that we have in this\nstate. It costs a lot to collect, it doesn't bring in very much and it\ndrives business out and discourages new business from coming in. We have\nto encourage new business and new capital to come to California. We need\nabout $2 billion in new private capital each year, and unless we get it,\nwe can't provide the new jobs that we have to have to take care of our\ngrowing population. So repealing or reducing this inventory tax by over\n50 percent is a vital objective we need this year.\nThat, governor, is a summary of Phase 1 of our tax reform program.\nGOVERNOR REAGAN: Yes, and as Craig said, we are talking about tax\nreform, revising the present inequitable situation which exists, and\nspreading the burden more fairly over a broader base of taxpayers. Now,\nthis means, in part, correcting one of the most unfair burdens of our\npresent system, the burden that the property taxpayer, the homeowner, has\nto pay.\nWhat we have discussed so far are the proposals contained in Part 1\nof our tax reform program and legislative package. These proposals are\nimportant in themselves, and they are also important as the initial steps\nof our long-range overall tax reform program.\nThese proposals should be passed this year---by the 1969 legislature\nNow, the second phase of the tax reform package is related to the\nfirst part in that it seeks to achieve a more balanced tax structure\nthrough a reduced reliance on property taxes and a reduction in those\nproperty taxes. The first part--the 1969 phase--must be approved by the\nLegislature before we can put it into effect. The second part--which we\nwill now discuss--will require amending the Constitution, which means--\nand this is important--that the voters will have the opportunity to vote\non the proposals in 1970. That is essential. In a move of such\nimportance, we want every voter to be able to voice his opinion through\nthe ballot box. The people should speak.\n- 3 -\nIn this long-range Phase 2 comes the most far-reaching proposal\nnot only in the area of tax reform, but also for the benefit of our\npublic school system.\nIts approval and application would be a giant step in the direction\nof equality of educational opportunity for all children in the state's\npublic school system.\nIt would reduce the far too heavy burden now borne by the\nresidential property taxpayer.\nThat is a burden which has increased nearly 100 percent, with an\naverage increase per year of approximately 10 percent. Bear in mind\nthat there is not always a corresponding increase in the income of the\nhomeowner to pay these double taxes. In many cases, he has already paid\nfor his home, in whole or in large part, but he can't afford to keep it\nbecause of those property taxes. At the same time, many young couples\ncan't afford to buy a home because property taxes are such a big piece\nof their projected monthly payments.\nWhile it is true that the things property taxes are going for are\nimportant, the people paying the bill, the individual property taxpayers,\nhave absolutely had it up to here. They have pretty much reached the\nend of their rope.\nAs a consequence, this absolutely must be the first major area of\nreform to shift part of this burden from the property tax to the more\nequitable income tax.\nTied in with this would be a statewide program of providing stronger\nfinancing and more home rule for the local school district.\nAnd at the same time, we must provide an effective guarantee that\nproperty tax rates would not be raised at the local level to offset the\nreductions proposed under this state plan.\nThere is widespread agreement that we must overhaul the tax structure\nused to finance our public school system. The existing financing program\nfor elementary and secondary schools in California does not provide equal\neducation opportunities for all children in this state.\nElementary school district expenditures, for example, range from as\nlittle as $289 per ADA this means per average daily attendance, or $289\nper student all the way up to as high as $2,662 per student per ADA in\nsome school districts. Some low wealth districts struggle under an\nintolerable property tax burden while some high wealth districts are not\nso heavily burdened. In various parts of the state, specially incorporate\nareas have become virtual \"tax havens, thus escaping a fair share of\nthe costs of education while benefitting from the economic, sociological\nand industrial byproducts of the school system.\n- - 4 -\nWe propose to correct these situations in this way: 80 percent of\nthe residential property tax now used for schools would be replaced by a\nstatewide educational opportunity tax of one percent on adjusted gross\npersonal income, and the statewide non-residential property tax. This\nshift from the residential property tax, plus the increase in the\nhomeowners' exemption already mentioned in Phase from $750 to $1,000--\nwould reduce the average residential property tax throughout the state\nby about 50 percent. Let me repeat, what we are proposing here is a cut\nof about 50 percent or one-half in the average homeowner's tax.\nThe rate for this statewide non-residential property tax would be\napproximately $3.50 per $100 assessed valuation. Now, this is not a new\ntax added on to business or industrial property. It simply means that\n$3.50 of the tax rate they are now paying will be used for statewide\neducation. The increased personal income and the non-residential property\ntax would total approximately $1.6 billion and would be given to the\nschools in addition to the existing $1.3 billion in state subventions\nthat we are now giving the school districts. This would mean a total of\nabout $3 billion for state financing of California's local school\ndistricts, or 80 percent of the costs. The funds would be provided to\nthe various school districts on the basis of a flat dollar amount per\naverage daily attendance, thus eliminating the extremely complex\nfinancial structure, the red tape and undesirable state requirements that\nare forced on some local schools. It would mean that we could spend more\nof the educational dollar on education and less on bureaucracy. The only\nrequirement we would attach to the distribution of these vastly increased\nstate funds would be an ongoing cost effectiveness review of such\nexpenditures. Cost effectiveness yardsticks would be devised and\ninstituted to evaluate the performance of our educational system. In\neffect, we would require that \"report cards\" be given to our school\nsystems. In that way, the people of California could be assured that\nthey were getting a full measure of results for each dollar spent.\n- 5 -\nThis flat dollar ADA payment, which, as I said before, means the\namount paid to school districts for average daily attendance, would\nincrease at various grade levels, from kindergarten to junior college,\nrecognizing the increasing educational costs involved as the student\nmoves up through theschool system. The amounts proposed, by grade level,\nrange from $500 per student, or more accurately per unit of average daily\nattendance, for kindergarten through the sixth grade; $600 per ADA for\ngrades seven through nine; $700 per ADA for grades then through twelve,\nand $725 per ADA for junior colleges. $400 ADA also would be provided\nfor adult education courses. One other important feature is that these\nproposed levels would be adjusted annually to reflect reasonable changes\nin the cost of living index.\nThese state funds for education, totaling approximately $3 billion,\nshould help provide true equality of educational opportunity throughout\nthe state, and provide virtually every school district with a solid\nfoundation program. No longer will your children be penalized for\nliving in a particular part of the state. No matter where you live in\nthis state, your children would have access to a high quality education.\nThe people in some school districts may want to spend more per\nstudent and, therefore, in addition to the state's foundation grants,\nlocal school districts would have the ability to enrich their programs\nthrough additional expenditures should they desire to do so.\nHowever, to make sure that property taxes do not creep back to\nabsorb the proposed 50 percent reduction, the property tax rate which\ncould be levied by the local school board would be limited to $1.10 per\n$100 of assessed valuation for all grades, kindergarten through 14, or\nthe current level, whichever is lower. Bond redemptions as previously\nauthorized would, of course, be continued.\nShould the people in a school district wish to exceed this tax rate,\nsuch a permissive override would require the approval of 60 percent of\nthe voters in that district.\nOver the years, each time more state revenue has been raised to ease\nthe burden of residential property taxpayers for the support of the schools\nthe result has simply been a higher total tax burden for each of us. The\nrequirement that 60 percent of us must agree before our taxes could go\nup is designed to protect the taxpayer from just such an occurrence.\n- 6 -\nWe also would hope, and will certainly urge, that the federal\ngovernment permit California taxpayers to allow this school opportunity\ntax as credit against their federal income tax payments.\nOne of the problems with any tax reform program is that in spreading\nthe base and easing the burden that has been carried too long by a given\nsegment in this case, the property owner some citizens are going to\npay more than they have been paying in the past. In cutting property\ntaxes by some $750 million and picking that amount up elsewhere by\nbroadening the base and increasing the amount paid by all state income\ntax payers, one group that will carry more of the burden than they have\nin the past will be the renters. To ease this situation we are proposing\nthat the landlords be required to notify their tenants as to that portion\nof their rent which could be reduced because of the cut in property taxes.\nSuch a notification would stimulate the free play of the rental market.\nWe further anticipate that this will encourage the landlord to share his\nproperty tax reduction with the tenant through reduced rent. We also\nbelieve that because the excessively high property tax is one of the\nfactors that causes homes to cost so much, a major property tax reduction\nwill enable many people who cannot now do so to buy their own homes.\nWe know this is not a perfect situation, and we will continue to\nwork on this and other aspects of the program as our tax reform package\nmoves through the legislature. And, we hope you, too, will participate\nand let us know your views.\nWe are also concerned that the property taxpayer who has so long\nbeen burdened by this oppressive tax really gets the relief he needs\nand that his taxes will not be increased by the counties, cities and\nspecial districts, thus again eating up the tax relief which our tax\nreform program is designed to provide.\nBut because we do not want to rely on hope alone, we are asking that\nspecific limits be established for local property taxing procedures. We\npropose that a vote of 60 percent of the people be required before any\nlocal property taxes are allowed to go back up again, after this program\nbrings them down. Should local governments want to exceed these set\nmaximums, they would have to get voter approval.\nNow, Cap, would you discuss these safeguards and procedures in a\nlittle more detail.\n- 7 -\nCAP WEINBERGER: Yes, actually, what this does---and this is a novel\nand a very welcome feature of this program- is put a lid on property\ntaxes right at the local level, and it would require, as you said,\nGovernor, a vote of 60 percent of the voters to lift it. At the same\ntime, any increase in taxes at the state level would have to be approved\nby a two-thirds vote of the California state legislature just as is now\nrequired when we spend our money, because we have a two-thirds vote\nbefore the budget can be adopted.\nGOVERNOR REAGAN: There are several other things which I wish you\nwould discuss briefly which are also part of our long-range tax reform\nproposals. Though less far reaching, they, too, will require voter\napproval and should be considered on their individual merits, and as\npart of an overall program.\nSo, Cap, why don't you outline the parts of that particular program.\nCAP WEINBERGER: For one thing, we have a necessity here to relieve\npart of the double misery which is caused by figuring both federal and\nstate income taxes every April. It would be essential that we have what\namounts to a carbon copy of the federal income tax, paid as part of the\nstate income tax. So all you would do would be to tear off your top\ncopy and send it to Washington, and send the bottom copy to Sacramento\nwith the percentage adjusted so the income tax would be as it is now.\nAnother thing which I think is essential isthat we try to make land\nspeculation a lot less attractive, and to do that, we are urging that\nthe capital gains treatment of the sale of unimproved property, held\nless than lo years, be removed, and that such a tax be paid as ordinary\nincome. The revenues realized by this would be used to help preserve\nopen spaces in and around these tremendously, rapidly growing urban areas.\nAlso, it would retain California's competitive position. Under our\nproposal 2, agricultural property would be taxed solely as farm property\nas long as it is used for that. At the moment, as you know, farm property\nis taxed on what it might bring if it were turned into a subdivision.\nThe legislation also would provide that if land is converted from\nagricultural to non-agricultural use (such as a subdivision), then the\ncounties would be given the means of recapturing that lost tax revenue.\n- 8 -\nAnother thing that I think is tremendously important is to assist\nthe old-age property owner. In order to do that we are proposing that\nneedy individuals over 65 be permitted to postpone the payment of taxes\non their homes. If they authorize the county to secure eventual payment\nof these taxes, after the property is transferred, this would be counted\nas a lien against the property, which can be paid either by the\nindividual, or, in the event of death, by his survivors.\nGOVERNOR REAGAN: Cap, fine. Since this total tax reform program\ndoes represent a partial shift from property taxes to personal income\ntaxes, we are also proposing a voluntary prepayment plan, with four\noptions:\nThis is something that Craig Biddle has worked out after great\nthought, study and discussion. Craig, why don't you go over these\nproposals.\nCRAIG BIDDLE: I think what you are doing in this proposal is you\nare addressing yourself to two very serious problems we will be having\nin California, the first being individuals who come into the state and\nimmediately get all the services that are available to them from the\nState of Celifornia, but, yet, don't pay income taxes. And then,\nsecondly, the individuals who want to have their income taxes withheld\nand pay on a monthly or weekly basis, rather than the total lump sum\npayment. So this proposal says that the individuals who are new to this\nstate, who did not file an income tax return for the State of California\nthe preceding year, they must have their income taxes withheld, just as\nwe do on the federal level.\nBut those individuals, the Californians, the residents, who have had\ntheir income tax filed for the preceding year, have four options at that\ntime of what they want to do in connection with their income taxes.\nThe first option, of course, is that the employer can withhold the\nincome tax payment at the employees' request, and then they remit these\nsums to the state, receiving a credit for the cost of the employer's\nadded bookkeeping expense. Also, the employee would get a two percent\ndiscount for the voluntariness of his act which brings about the\nwithholding.\n- 9 -\nThe second option: The individual could pay, if he wanted to,\nhis state income tax on a quarterly basis. If he did this in advance,\nhe would also receive the two percent discount, or credit on his taxes\nat the end of the year.\nThe third alternative is that the individual employee could make\nhis own arrangements, with the cooperation of his employer, to deposit\nin an account under his control the monthly amount necessary to pay the\nestimated tax at the end of the year.\nor, of course, fourthly, he could continue to not participate in\nany program of any sort, but he could pay on an annual basis or a semi-\nannual basis as he does at this time.\nI think the provisions for these voluntary options would simply be\na convenience for the taxpayer, and, of course, the state would not\nmake any money on any of these plans, and if any windfalls were realized,\nthe law provides that this would be placed in a special tax relief\nfund to be returned to the taxpayers as a one-time rebate, as we are\nadvocating be done with the $100 million next spring.\nGOVERNOR REAGAN: Thank you, Craig. And on that last point, let\nus be certain there is no mistake about that. I want to make it\nabsclutely crystal clear that this administration's proposal to provide\na rebate of $100 million in personal income taxes is totally separate\nand is in addition to this overall tax reform package. The one-time\nrebate is designed to return to the taxpayer a surplus, produced by our\neconomies and by national inflation, rather than spending it here in\nSacramento.\nThe tax reform program we have been discussing, which is now in the\nhands of the legislature, is an effort to achieve a long-term overhaul\nof our tax system on a relatively permanent basis. There should be no\nconfusion or distortion on this particular point.\nThere is just so much we can do about tax reform at the state level.\nWhen you get right down to it, the big part of total tax reform has to\ncome from the federal government since that is where most of our taxes go.\nWe are encouraged by the amount of discussion in the present federal\nadministration about the need for tax reform. Ultimately, the only true\ntax reform will be that which involves a major reliance upon a more fair\nand more equitable income tax in which various exemptions are virtually\neliminated, a much lower total tax rate is imposed, and a great many\nof the existing inconsistencies and loopholes are closed.\n- 10 -\nFurthermore, the federal government must share some of the income\ntax revenues that our citizens send to Washington each year, by returning\nto the states a portion of these revenues, without strings attached, just\nas we propose to return state revenues to school districts, without\nstrings attached.\nBut, with all of this, there is one irrefutable, unyielding fact\nof government life which must also be faced squarely, and coped with\nconstantly.\nThere is only one way to reduce taxes and that is to reduce\ngovernment spending. One is impossible without the other, especially\nunder our state constitution which prohibits deficit spending.\nAt present, federal, state and local taxes take $1,350 for every\nman, woman and child in California. That is $5,400 a year for a family\nof four, and of that, more than $3,400 goes to Washington. That is\nridiculous.\nWhile we can't do anything directly about the federal situation,\nwe want to do something about it at the state and local level.\nAdmittedly, real tax reform is going to cause some problems in some\nareas. As property taxes are cut 50 percent, some people are going to\nhave to pay much more in state income taxes in the form of the educational\nopportunity tax, and they will be unhappy.\nBut, this is the best that we can do, and, again, we reiterate, we\nare not getting any additional money from the taxpayer. We are\nredistributing the money to a certain extent.\nWe want to hear from you with your suggestions. Write to us, mark\non the outside of the envelope, TAX REFORM, and let us hear your ideas\non this.\nIn other words, we don't want any more tax gimmicks. We want true\nreform, so keep those cards and letters coming, folks.\n########\n- 11 -\n69\nX\nOFFICE OF THE GOVERNOR\nSacramento, California\nMEMO TO THE PRESS\nContact:\nPaul Beck\n445-4571\n12-22-69\nFollowing is the text of a filmed Report to the People (104 sec.\nin length) by Governor Reagan which has been distributed to California\ntelevision stations for use after 5 p.m. Monday, December 22. (The\ngovernor's recorded statement is available to radio stations at\n916-445-0101. Members of the Capitol Press Corps who serve radio\nbroadcasters in the state may wish to reproduce a tape-recording of\nthe governor's statement which is available in the governor's press\noffice---also embargoed for use after 5 p.m., Monday, December 22.)\nAir Pollution\n\"When I took office I promised you this administration would wage\nan all-out war on air pollution.\n\"We have done this. We have adopted the strongest controls on air\npollution by any state in the union. Automobiles literally have to be\nmanufactured to California specifications.\n\"Today I am proposing a six-point program that will bring California\none step closer to victory. I am ordering:\n1--Immediate conversion of 175 state vehicles to a dual fuel system\nthat will permit the use of smog-free compressed natural gas.\n2--Conversion of other state vehicles to this system on a programmed,\ncontinuing basis.\n3--Locating all cars converted to natural gas and 1970 model state\ncars with emission controls in major smog-affected areas.\n4--Requiring all 1971 autos and trucks purchased by the state for\nuse in smog-troubled areas meet the proposed 1975 emission standards.\n5--Proposing that as an incentive, the fuel tax on natural gas be\nreduced to all fleet operators---both public and private.\n6--Developing a new systematic testing and tune-up procedure to\ninsure sustained low vehicle emissions.\n\"As I have pointed out, this war against foul air must concern not\nonly government and industry but every private citizen as well---not some\nmysterious \"they\", but \"we\" cause pollution, and \"we\" can remedy it.\n\"This new program will help us win another skirmish in the war we\nare fighting to protect our environment for this and future generations.\n\"I will be announcing other new programs and policies in the coming\nmonths.\"\n#########\nEJG\nOFFICE OF THE GOVERNOR\nRELEASE:\nSacramento, California\nMONDAY, DECEMBER 22, 1969\nContact:\nPaul Beck\nPLEASE GUARD AGAINST\n445-4571\n12-22-69\n#683\nPREI ATURE RELEASE.\nGovernor Ronald Reagan today announced a six point program\ndesigned to use the state's fleet operations and purchasing and taxing\npowers to encourage and expedite the use of smog-free motor vehicles\nin California.\nTerming the fight against air pollution \"a matter of urgent\nnecessity--a war which we must win; a war we intend to win\" the\ngovernor outlined his plan:\n1. Immediate conversion of 175 state vehicles to a dual\nfuel system which will permit the use of virtually smog free compressed\nnatural gas (CNG);\n2. Conversion of additional state vehicles to the dual\nfuel system on a programmed and continuing basis;\n3. Locating low emission cars, and new 1970 model state cars\nin major smog affected areas;\n4. Requiring that 1971 autos and trucks purchased by the\nstate for use in smog troubled areas meet the proposed stiff 1975 vehicle\nemission standards;\n5. Reducing the fuel tax on natural gas as an incentive\nfor other fleet operators--private and public--to join with the state\nin this part of his clean air campaign, and\n6. Developing a systematic testing and tune-up procedure to\ninsure sustained low vehicle emissions.\nThe first phase of the program, the conversion of 175 state\noperated vehicles to the CNG dual fuel system, will begin immediately,\nthe governor said. With the dual system, the vehicle could be operated\non the highway or in open country on regular gas, then switched to\nnatural gas for driving in the smog-plagued metropolitan areas.\n\"The state is one of the very large motor vehicle fleet\noperators\", the governor pointed out. \"It should lead the way in this\nspecific effort to reduce vehicular air pollution in our cities.\"\nAt the request of Assemblyman Pete Schabarum (R-Covina)\nthe State Highway Commission allocated funds to test the dual system on\n10 state autos. The tests were conducted under the supervision of the\nState Air Resources Board and the satisfactory results of those tests\nprompted the governor's decision to begin converting a portion of the\nstate auto fleet to compressed natural gas. The governor said the\ntest vehicles scored below the state requirements set for 1974 models,\nand that with some modifications, they could meet the even stiffer 1975\nThe governor's program calls for additional dual system autos\nto be converted and added to the state fleet on a monthly basis.\nUnder the program, the state will also put into operation vehicles\npowered by other low emission fuels and engines when these prove practical\nSuch vehicles might include steam and electric powered cars and trucks\nas well as those powered by improved gas turbines.\nDuring recent months, the Reagan administration has been\nmaking stringent efforts to cut back on the total number of motor\nvehicles operated by the state government. Part of the savings realized\nby the cutbacks will be used to pay for the conversion of internal\ncombustion engined cars to the dual system. \"At the same time,\" said\nthe governor, \"some 1970 model autos will be purchased with the\nconversion system installed before use.\"\nAll converted and 1970 low emission state vehicles will be\nlocated and operated in major cities such as Los Angeles, San Francisco,\nSacramento and San Diego, areas considered to have smog problems.\nOlder vehicles will be transferred to rural and other areas not\nexperiencing air pollution problems.\nThe Air Resources Control Board recently called for emission\ncontrols on 1975 model cars which would be even stiffer than the\nCalifornia standards set for the 1974 models. The governor announced\nthat he has instructed Verne Orr, director of General Services, to\nrequire that those 1971 models purchased by the state for use in high\npollution areas meet the stiff 1975 standards. In lieu of meeting the\n1975 requirements with internal combustion engines, CNG switchover dual\nfuel system installation would be permitted.\nThe governor urged other major fleet operators in California--\npublic utilities, city and county governments-- to make similar dual\nsystem conversions.\nAs one incentive, the governor said that he will ask the\nlegislature to cut the present state tax on natural gas for automotive\nuse by almost 60 percent-- from 7 to 3 cents per 100 cubic feet, the\namount of CNG comparable to a gallon of regular liquid gasoline. The\nstate tax on a gallon of gasoline is 7 cents and would remain unchanged.\n-2-\nIf the legislature approves the govern or's request, the cost\nfor natural gas would be about 14 cents, compared to about 30 cents\nper gallon of gasoline.\nTo encourage city and county governments to convert their\nvehicles, the governor stressed that the state's massive purchasing\npower was available to them. Many city and county governments already\nwork with the state's department of General Services to save money in\nthe purchase of police and other vehicles.\nThe average cost of converting an auto to the dual system is\n$400. It is estimated that tax and fuel cost savings should average\n$100 a year under normal fleet operation. The dual fuel unit can be\nswitched from an old to a new vehicle when the car is sold or traded.\nThe governor acknowledged that there are some disadvantages in\noperating on compressed natural gas including the initial conversion\ncost, the present scarcity of natural gas stations (the state plans to\ninstall its own), the relatively limited operating range on a tankful\nof gas, and the amount of trunk space needed for the natural gas tanks.\n\"However, the point is--we can start achieving low pollution\nnow, and that outweighs any disadvantages as far as we are concerned,\"\nthe governor concluded.\n# # #\n-3-\nWAS\nOFFICE OF THE GOVERNOR\nRELEASE: 5 P.M. DECEMBER 22.\nSacramento, California\nContact:\nPaul Beck\n445-4571\n12-18-69\nMEMO TO TELEVISION NEWS EDITORS\nThe accompanying color videotape contains a Report to the People\nby Governor Ronald Reagan for use AFTER 5 P.M. DECEMBER 22, 1969.\nIt runs 1:44. Please guard against premature release.\nEnclosed is a news release---also embargoed for use after 5 p.m.\nMonday, December 22 -containing additional details of the program being\nannounced by the governor.\nFollowing is the text of the taped Report to the People:\n\"When I took office I promised you this administration would wage\nan all-out war on air pollution.\n\"We have done this. We have adopted the strongest controls on air\npollution by any state in the union. Automobiles literally have to be\nmanufactured to California specifications.\n\"Today I am proposing a six-point program that will bring California\none step closer to victory. I am ordering:\n--Immediate conversion of 175 state vehicles to a dual fuel system\nthat will permit the use of smog-free compressed natural gas.\n2--Conversion of other state vehicles to this system on a programmed,\ncontinuing basis.\n3--Locating all cars converted to natural gas and 1970 model state\ncars with emission controls in major smog-affected areas.\n-Requiring all 1971 autos and trucks purchased by the state for\nuse in smog-troubled areas meet the proposed 1975 emission standards.\n-Proposing that as an incentive, the fuel tax on natural gas be\nreduced to all fleet operators both public and private.\n--Developing a new systematic testing and tune-up procedure to\ninsure sustained low vehicle emissions.\n\"As I have pointed out, this war against foul air must concern not\nonly government and industry but every private citizen as well---not some\nmysterious \"they\", but \"we\" cause pollution, and \"we\" can remedy it.\n\"This new program will help us win another skirmish in the war we\nare fighting to protect our environment for this and future generations.\n\"I will be announcing other new programs and policies in the coming\nmonths.\"\n#########\nEJG"
}