Key Democrat Breaks Party Ranks, Offers Plan to Balance State Budget

In an effort to end the budget deadlock, a Democratic Assembly leader broke ranks with other party members Friday and proposed a series of cuts and revenue increases designed to give Gov. George Deukmejian a balanced budget.

Assemblyman Phillip Isenberg (D-Sacramento), saying that he was going public with the plan because he was not sure that he could even get a seconding motion from another Democrat, proposes cutting $900 million from the Assembly’s $45.1-billion version of the state budget. Included would be cutbacks in Democrat-backed programs such as health, education and welfare.

In addition, Isenberg recommends tax changes to bring in an additional $550 million in revenues by speeding up payment of state sales and income taxes by individuals and corporations.

Isenberg, a close ally of Assembly Speaker Willie Brown (D-San Francisco), told reporters at a Capitol news conference, “Right now, (the plan) has no support other than me.”

But Isenberg, a former mayor of Sacramento, commands so much respect in the Capitol that his announcement drew an unusual amount of interest. Aides to Democratic and Republican lawmakers crowded into the legislative hearing room where Isenberg held his news conference.

The turnout reflected the frustration lawmakers feel in dealing with an estimated shortfall of $1 billion a year in income tax revenues. The shortfall was caused by miscalculations in how much revenue would be generated by legislation enacted last year to bring state tax codes into line with the Federal Tax Reform Act of 1986.

Isenberg’s proposal is the closest any Democrat has come to a budget plan that would avoid massive vetoes by Deukmejian of spending items. It contains the same dollar amount of appropriations that the governor has proposed in his budget, including a $600-million reserve. Neither of the budgets prepared by the Assembly and Senate contains a reserve, and both would substantially increase spending over the level outlined by Deukmejian.

Bypasses Committee

By going public with his plan and bypassing the Ways and Means Committee, Isenberg points up continued dissension within the ranks of Assembly Democrats over budget policy. Months ago, five rebellious Democrats broke ranks and robbed their party of an effective majority in the Assembly. Much of the dissatisfaction of the so-called “Gang of Five” stemmed from budget and spending priorities pushed by Democrats who control the Ways and Means Committee.

Isenberg, the assistant speaker pro tem of the Assembly and a member of the committee, has clear differences with Assemblyman John Vasconcellos (D-Santa Clara), chairman of Ways and Means.

Vasconcellos denounced Isenberg’s proposal with an obscenity because it calls for dramatic budget cuts. Isenberg said his goal is a balanced budget so that Deukmejian cannot cut into the core of Democrat-supported programs with his veto.

Deukmejian Administration officials said Friday that they were studying Isenberg’s proposal.

Isenberg proposes removing about $550 million in increases Democrats made to Deukmejian’s budget. He would provide only six-months’ worth of inflation adjustments for schools, welfare recipients, and aged, blind and disabled people receiving special income supplements. Increases for the last six months of the year would be tied to passage of a $550-million revenue bill.

The revenue proposal is designed to get around Deukmejian’s opposition to a tax increase or anything perceived as a tax increase. Rather than increase tax rates, as some Democrats are proposing, it would speed the collection of already-due tax obligations.