New State Budget Seen $1.5 Billion Short of Needs

The chairman of the Assembly Ways and Means Committee, quoting from a previously unreleased state report, said Tuesday that California will be $1.5 billion short of what it will need to adequately finance state programs in the next budget.

Assemblyman John Vasconcellos (D-Santa Clara), the chief budget negotiator for Assembly Democrats, blamed the problem on growth of state programs, continued softness in state tax collections and pressure on the budget created by voter approval of Proposition 98, the school funding initiative.

The veteran lawmaker said the situation developed as a result of Republican budget policies that began with Ronald Reagan when he served as governor, were complicated by initiatives advanced by anti-tax crusader Paul Gann and then were brought to a head under Gov. George Deukmejian.

“It’s the Reagan chickens, the Deukmejian chickens and the Gann chickens coming home to roost. That’s quite a flock,” Vasconcellos told reporters during a news conference in his office.

Vasconcellos released a report by the Commission on State Finance showing that state tax collections will grow by $2.6 billion in the fiscal year beginning next July 1. Despite the boost, the commission said the state will fall a minimum of $113 million short of what it will need to finance current programs after providing the increases for inflation required by law for health, education and other programs.

But Vasconcellos said the potential shortfall will reach $1.5 billion with the addition of the $1.1-billion reserve that Deukmejian has said he wants and the extra money that Vasconcellos contends is needed for inflation-related increases to other state programs.

Such a shortfall would amount to about 3% of the overall state budget, assuming that the fiscal 1990 budget is moderately larger than the current year’s $44 billion.

Target Areas

Vasconcellos’ prediction comes on the heels of warnings by Deukmejian and other Administration officials that the governor will send the Legislature a proposed state budget Tuesday calling for budget cuts of as much as $400 million or more in the University of California, the California State University system, mental health, aid to counties and other programs.

Deukmejian Press Secretary Kevin Brett disputed Vasconcellos’ contention that a large part of the problem is due to a softness in tax collections, which the Democrat linked to legislation signed by the governor in 1987 bringing state tax law into conformity with federal tax codes.

Brett blamed the problem on the fact that 92% of the state budget is tied up by funding guarantees for schools, health, welfare and other programs.

As a solution, Deukmejian has said he wants the Legislature to consider supporting changes in state budget law.