Extended Session Called in Impasse With Deukmejian

Lawmakers extended the scheduled adjournment of the two-year legislative session an extra two weeks Saturday, in part to see if they can resolve a fight with Gov. George Deukmejian over efforts to revive funding for education and human services programs vetoed from the $37.4-billion state budget.

The surprise decision to extend the session came after Deukmejian threatened to call the Legislature into special session if lawmakers went home without resolving the impasse over budget vetoes and the Senate’s refusal to approve the governor’s plan for a prison in downtown Los Angeles.

Wrangling over the $283 million in vetoed budget items as well as the proposed prison dominated a private lunchtime meeting between the governor and legislative leaders Saturday.

Both sides had hoped the meeting would lead to an agreement on the last major pieces of business still on the lawmakers’ agenda as they struggled in vain to adjourn their two-year session and prepare for the Nov. 4 elections.

But the meeting, according to the participants, served mostly to point up areas of sharp disagreement between the executive and legislative branches. Deukmejian wanted to finance the vetoed programs with surplus money from the state retirement fund, something Democrats had agreed to before public employee unions objected.

“The governor is very frustrated,” reported Senate Republican Leader James W. Nielsen of Rohnert Park. “He believes that some deals were made and bargains were not kept.”

But Senate President Pro Tem David A. Roberti (D-Los Angeles) told reporters, “We refuse to allow them to balance the budget on the backs of state employees.”

Steven A. Merksamer, the governor’s chief of staff, said after the meeting: “The governor feels very strongly that we ought to fund these (vetoed) programs. And he feels very strongly that the funding mechanism that everyone agreed to is the correct mechanism. So, at this point, there’s no yielding.”

Assembly Speaker Willie Brown (D-San Francisco), after emerging from the meeting, said, “I am going back upstairs to warn my members that whatever plans they have for Tuesday, they ought to change.”

Deukmejian, in vetoing the $283 million in programs last June, said he would restore them if the Legislature agreed with his plan to use surplus investment revenues from the $37-billion state Public Employees Retirement System pension fund.

The larger vetoes included $112 million for low-wealth urban school districts, $50 million for county health services for the indigent, $34.2 million for community colleges facing declining enrollment and $64.6 million for transportation programs, including school buses in rural counties.

Keep Legislature Working

The cuts hit hard at constituents served by both Republican and Democratic lawmakers and, despite their disagreements over where the money would come from, all parties agreed that the issue was important enough to keep the Legislature working past its scheduled adjournment.

Senate Democrats, with support from some Republicans, had agreed late Friday to attempt to pass a bill restoring the programs. But the lawmakers could not find the money to finance the entire $283-million package, and the move was stalemated Saturday by the governor’s opposition to any proposal that did not include his plan to take money for the entire package from the pension system.

Under the governor’s plan, the state would reduce its contributions to the pension system by $112 million, and take out more than $150 million in surplus funds that have built up in the system’s reserve as the result of double-digit returns on its investments. Pensioners would not suffer any loss in current or future income.

Plan Called a Raid

There has been no disagreement over the $112-million reduction in state contributions, which is already under way. The problem is the governor’s proposal to use the surplus.

Roberti blamed Deukmejian for the controversy, pointing out that shortly after the budget was approved, the governor’s appointees on the pension board fired former Executive Director Sid McCausland. McCausland had opposed the use of pension fund money to balance the budget, and called the plan a raid that would endanger the long-term stability of the pension system.

State employees reacted angrily to McCausland’s firing, claiming that the traditionally neutral pension board had turned political and no longer was protecting employee interests. Allied closely with Democrats in the Senate, employee groups lobbied successfully for the defeat of the bill that was needed to make the pension fund transfer.

Roberti said the governor easily could finance the vetoed programs if he was willing to use a portion of the state budget’s $1-billion reserve fund.

‘Nothing Scarier’

“Why is the budget’s reserve fund more sacrosanct than the employees’ pension fund reserve? There is nothing scarier to the average citizen than the fear that his pension fund is threatened. Why are state employees being made the patsies?” Roberti asked.

With many lawmakers facing important district elections Nov. 4, the prospect of an extended session means that they will have to reschedule the start of their full-time campaigning.

The Labor Day holiday on Monday is the traditional kickoff to the final round of campaigning leading up to the fall elections.