Taxes on Media to Help Close State Budget Gap : Legislation: A levy on publications begins next week, and assessments on cable TV might grow.

Next week, Californians begin paying more for newspapers and magazines. And if Gov. Pete Wilson has his way, they also may be paying a few extra dollars each month for cable TV service.

California’s wealthy media industries are facing new taxes to help close the state’s $14.3-billion budget deficit. And not surprisingly, this has provoked howls of protest from the affected industries, several of which historically have had an exemption from sales tax.

Complaining about taxes is as old as the Boston Tea Party. But the state’s latest plan may push some already shaky businesses over the edge and add another level of taxes upon industries that are taxed two, three and even four times.

A few extra cents or even dollars per month may not sound like much, but it can quickly add up when collected from all the state’s cable TV subscribers and newspaper readers.

The legislation that extends sales tax to newspapers and magazines could yield $85 million annually. Another $132 million could be raised from cable TV subscribers if the state adopts a proposed 6% telecommunications excise tax or $44 million if it enacts a 2% utilities tax, according to the California Cable Television Assn.

There are 5.5 million cable TV subscribers in California who pay an average of $30 a month for service. Operators of local cable systems say that already includes $5 a month in taxes, a figure that would climb further if a state excise tax is imposed. The total tax burden on cable systems, they claim, could run as high as 25% to 30%.

Virtually all cable systems pay 5% of their gross revenues to the local franchising authority, usually a city or county. In addition, cities increasingly are assessing a utility user’s tax on cable systems, similar to the 10% tax that Los Angeles Mayor Tom Bradley tried to push through earlier this year.

The taxes imposed by cities can vary by a wide margin. Culver City recently passed an 11% tax on cable, and Huntington Beach enacted a 5% tax. Pasadena has an 8.9% rate. At last count, 42 cities in California have enacted a utility tax on cable TV.

There are also a growing number of counties that are changing the formula on how they calculate the so-called possessory-interest tax, which would boost the property tax paid to the county.

Cable companies typically pass along city and county taxes directly to the cable TV subscriber. The operators say they will do the same with any statewide tax.

But it may be hard for California’s $2.2-billion cable industry, which has a virtual monopoly in its service areas, to garner much sympathy among politicians and the public.

A recent national survey found that 59% of cable operators boosted rates 10% or more in 1990. In Los Angeles, where there are more than 500,000 subscribers, basic cable rates have soared 94% since deregulation took effect in January, 1987.

Nevertheless, William R. Cullen, senior vice president of United Artists Cable Corp. in Los Angeles, said the state is trying to tax cable and other utilities because they’re an easy target.

“Politicians are on this hunt for money because they know we bill our customers monthly and will pass it along,” he said.

The fate of the cable TV tax rests with the industry’s lobbying campaign in Sacramento. Cable operators have flocked to the capital for several weeks, armed with charts and reams of data purporting to show how onerous another tax would be.

The lobbying is all over for newspapers and magazines, however. All publications are now subject to sales taxes, just like most other products.

The tax especially rankles the state’s publishers of smaller free-distribution newspapers because they believe it favors their larger, wealthier competitors.

Daily newspapers can simply pass along the new sales tax--on average about 8%--to their subscribers. Giveaway newspapers, however, will be taxed on their costs of newsprint and ink.

“It makes our lives more difficult,” said James Vowell, publisher of the L.A. Reader. “I’ve just had a 2.5% to 3% increase in costs and essentially no way to recover that.” Vowell says the tax will cost an extra $40,000 annually.

“I could do things like lay off an employee or two or eliminate color covers, which is about what it amounts to,” he said.

There are 18 so-called alternative weekly newspapers in California, and most of them compete against powerful daily newspapers owned by chains.

Several big newspapers, including the Los Angeles Times, San Francisco Chronicle, San Diego Union and Sacramento Bee, hired George Steffes, a well-connected Sacramento lobbyist, to fight the tax, but to no avail.

“There is a giant inequity here,” said Steve McNamara, editor-publisher of the Pacific Sun in Marin County and president of the California Assn. of Alternative News-weeklies. McNamara notes that paying a sales tax that can be passed on to subscribers is different from paying one that can’t. “The rich papers are going to escape with no impact whatsoever,” he said.