Saying Proposition 98 is making the state budget unfair, Gov. George Deukmejian has proposed widespread budget reform that would “clear away stringent restrictions” such as voter-approved initiatives. State Supt. of Public Instruction Bill Honig said the blame for state budget problems should not go to the schools and Proposition 98 but to the $2.2 billion in tax rebates and breaks given out in the last year by Deukmejian and the Legislature. The Republican governor won’t unveil his proposed $40-billion-plus proposed 1989-90 state budget until Jan. 10, but the political discussions have already begun. A central focus of the coming budget battle will be Proposition 98, the initiative passed by voters on Nov. 8 and backed by Honig and education groups such as the California Teachers Assn. Proposition 98 sets minimum annual funding levels for schools and community colleges and will require the state to give schools an estimated $215 million in the next fiscal year.