UPDATE: CRA backs 1-cent sales tax hike for health insurance

SACRAMENTO Calif. As an alternative to the state Legislature’s push for a steep health care tax on employers, the board of the California Restaurant Association has voted to back a 1-cent increase in sales tax to fund universal health insurance in the state.

CRA chief executive Jot Condie said the resulting increase in tax revenue of more than $5 billion annually would provide a “sustainable program” and avoid a legislative “deal” that would reduce coverage levels, increase medical costs and harm businesses and workers.

Support by the industry’s largest state restaurant association for a 2008 ballot measure to authorize such funding marks a strategic shift for the CRA, which in 2003 led opposition to a proposal in the Democratic-dominated Legislature to require all employers to provide medical insurance for employees.

“Because of what is being proposed [in the Legislature], this action seemed to the board to be a proactive position and a viable solution,” CRA spokeswoman Kearsten Shepherd said.

Shepherd said she could not immediately confirm a report that the association may also support a small payroll tax to help pay for the extension of coverage to millions of uninsured Californians.

Sacramento Bee columnist Daniel Weintraub quoted Condie as saying that the CRA may back a minimal payroll tax for that purpose. According to Weintraub, CRA officials “fear what might happen if a Democratic governor succeeds [Gov. Arnold] Schwarzenegger in 2010.”

Democrats in the statehouse here have been eyeing a proposed 7.5-percent payroll tax on restaurateurs and other employers that do not provide health insurance. Schwarzenegger has called for extending coverage through a smaller payroll tax and new fees on certain health services.