Increase of $264.4 Million Expected in State Spending

State spending will increase $264.4 million over what Gov. George Deukmejian had projected in his January budget estimates, it was reported Tuesday.

That total, reported in a budget update by the Department of Finance, includes a $169.9-million spending increase for the current fiscal year and an increase of $94.5 million forecast for the fiscal year that begins July 1.

The net effect will be to boost the governor’s proposed state budget to $33.7 billion.

The largest spending increases are for public school and health programs.

The expenditure update represents revised estimates of what it will cost to finance school, prison, state hospital and other programs, generally reflecting changes in student enrollments, inmate populations and the number of hospital patients treated.

Included in the new estimates is an expenditure of $63 million during the current year to underwrite a bail-out plan for people who deposited money with the Western Community Money Center, a thrift institution closed by the Department of Corporations because of substantial loan losses.

Also included are costs associated with a $42-million-plus package of bills to improve care in nursing homes signed into law by Deukmejian in March.

New estimates of tax receipts are expected to be released soon by state Finance Director Jesse R. Huff as the Legislature gets closer to completing its work on the budget. Officials familiar with the budget said tax receipts are expected to be substantially higher than earlier projections and should be enough to offset the expenditure increases.

The new estimates mean that spending has increased by 33% since Deukmejian took office.

Deukmejian defended his budgets at a news conference as “fiscally responsible,” saying that despite the spending increases, the state still will have a surplus reserve of $1 billion.

He said that much of the increase in funding was for programs that he said “had been allowed to decline,” citing expenditures on education and prisons.

The governor said that although spending is up, he is still trying to reduce the number of state employees.

“We’re trying not to spend as much money on overhead and what monies we are appropriating we’re trying to have those funds actually reach the beneficiaries of the programs with either services or benefits,” he said.

The yardstick that Deukmejian uses is former Gov. Edmund G. Brown Jr. Brown’s last budget was $25.3 billion and supported 228,489 full-time state jobs. Deukmejian’s proposed budget of $33.7 billion for the next fiscal year anticipates 227,342 jobs.

The budget update showed a decline of 545 jobs under estimates made in January, largely the result of revised estimates of the size of the prison population, which is expected to decline in the next fiscal year by 2,740 inmates.