$356.2 Million in Reserves OKd for Budget Shortages

Gov. George Deukmejian on Thursday signed a bill taking $356.2 million from reserve funds to cover shortages in the state budget for the few remaining days of the current fiscal year.

The governor approved the appropriations several hours after they had been overwhelmingly passed by the Legislature. Before doing so, however, he used his veto power to reduce by $4.8 million the $361 million voted by the Legislature.

Included in the emergency appropriation was $123 million that will enable the state to resume payments to doctors, hospitals, nursing homes and others who provide health-care services to the poor under the Medi-Cal program.

The Senate acted first, approving the Deukmejian-sponsored legislation 34 to 0. The Assembly followed, approving the measure 66 to 5.

While majority Democrats gave the GOP governor what he wanted, they used debate on the bill as an election-year forum to attack Deukmejian’s fiscal policies.

Deukmejian, running for reelection, has made his tight budget policies and the maintenance of a $1-billion reserve for unforeseen expenses a major campaign theme.

However, Sen. Alfred E. Alquist (D-San Jose), chairman of the Senate Budget Committee, contended that the bail-out legislation was necessary only because the governor pursued “a deliberate policy” of underestimating budget costs in order to maintain his politically attractive “$1-billion reserve fund.”

Made Prediction

Alquist noted that the Legislature’s chief budget consultant predicted as long ago as January that by the end of the fiscal year, the size of the reserve would be about half the $1 billion envisioned by the governor. Alquist said the prediction has proven correct.

Budget officials now say the reserve will be about $550 million, after the emergency appropriations are made for shortages in the current budget, which expires June 30. The next fiscal year, with a new budget, starts July 1.

Sen. Barry Keene of Benicia, Democratic floor leader, said Deukmejian’s budget cards were being “dealt from the bottom of the deck.”

“There is no $1-billion reserve,” he said, accusing Deukmejian of a “shell game.”

Keene argued that even the new $37.4-billion budget for the coming year is expected to be short about $500 million, although the governor, who is reviewing the spending plan, has claimed steadfastly that it will contain a $1-billion reserve.

“Many of these same budget deficiencies will be back before us in a similar bill next year, but they’ll be even bigger,” the lawmaker predicted.

Sen. John Seymour (R-Anaheim), the Republican Caucus chairman, accused Democrats of “election year rhetoric,” saying they were trying to make political capital out of such unforeseen developments as higher-than-expected demands on the Medi-Cal program.