Panel OKs Budget--but No $1 Billion in Reserve

A legislative conference committee gave final approval Sunday to a proposed state budget that cuts into the $1-billion reserve sought by Gov. George Deukmejian and virtually guarantees that he will veto at least $250 million in spending.

Amid warnings that future budgets may be far tighter, the two-house conference committee voted 6 to 0 to adopt a $37.5-billion spending plan that would eliminate 25% of the staff of the Agricultural Labor Relations Board and restore $55 million in mass transit spending.

“We’re about reaching the end of the road,” said Assemblyman William Baker (R-Danville), one of the six committee members. “We’re going to be talking now about restraining the amount we spend. It’s probably the end of the happy times.”

Limits on Spending

The spending plan for the fiscal year that begins July 1 comes within $20 million of a limit on state spending enacted by the voters in 1979. Next year, fiscal analysts expect to reach the limit for the first time, which would require the state to return money to the taxpayers rather than spend it.

The proposed budget now goes to both the Assembly and Senate for final approval this week, where it is unlikely to be altered.

In reconciling the initial Assembly and Senate versions of the budget, the committee reached a compromise Sunday that will result in cutting the staff of the Agricultural Labor Relations Board by 25%.

The board was created under former Democratic Gov. Edmund G. Brown Jr. to oversee farm union elections and resolve disputes between growers and farm workers. For years it drew criticism from Republicans and growers for being biased toward labor. But, under the Administration of Republican Deukmejian, the board has come under fire from Democrats who say it now favors growers.

The Assembly version of the budget had called for eliminating the jobs of 67 employees and the board’s general counsel, David Stirling. The conference committee voted Sunday to leave Stirling’s job intact while cutting 33 employees.

In another compromise, the committee voted to restore $55 million for the construction of new mass transit systems and operating expenses for existing bus and rail lines.

As a result of a decline in anticipated revenues from the sales tax on gasoline, Deukmejian proposed to cut $110 million in mass transit funds, including $15 million for bus systems in Los Angeles County and $8 million for the extension of the San Diego Trolley.

Delving into the area of foreign policy, the committee rejected a proposal that the California National Guard be banned from participating in training missions in Honduras, El Salvador or Nicaragua.

Notification Requirement

However, the panel voted to require the state Military Department to notify the Legislature if it intends to send troops for training into an area of the world where there has been armed combat in the previous 90 days or where there is “a reasonable likelihood” of fighting breaking out.

The requirement was prompted by the dispatch earlier this year of 30 California troops to Honduras to help guard equipment for a road-building project. Another contingent left last week for Panama.

Like Deukmejian’s proposed budget, the Legislature’s spending plan calls for no tax increases.

However, the budget approved by the conference committee proposes to spend about $250 million that Deukmejian had sought to keep in reserve for economic uncertainties.

In addition to the $55 million for mass transit, the legislative budget would spend more for education, such as programs for gifted and disabled students. It would also increase funds for health, including payments to doctors and other health care providers under Medi-Cal.

The $250 million difference includes the conference committee’s reduction of about $100 million in expected revenues, the majority being $75 million from Deukmejian’s proposed sale of state land adjacent to Agnew State Hospital in the Bay Area--a sale the committee refused to approve.

Deukmejian has proposed maintaining a $1-billion reserve and has frequently cited that figure in his campaign appearances around the state. The governor has promised to veto any spending that would bring the reserve below $1 billion.

Clifford Allenby, deputy director of the Department of Finance, estimated that the legislative version of the budget now includes a reserve of between $700 and $750 million.

“We will have a reserve of $1 billion,” Allenby said.