State Budget a ‘Parade of Pain,’ Panel Head Says

Seeing little chance of a bailout in the form of improved revenues or a budget compromise by Republican Gov. George Deukmejian, the Democratic chairman of the Assembly Ways and Means Committee said Wednesday that the Legislature may be forced to accept deep cuts in health and welfare programs.

Assemblyman John Vasconcellos of San Jose, in a briefing to Capitol reporters, said “there is no way to fix this budget” short of a major tax increase, which he conceded has little chance of passage.

As a result, Vasconcellos said he is looking ahead to “a parade of pain” when legislative budget committees get down to final action on the governor’s proposed $47.8-billion budget next month.

Kevin Brett, the governor’s press secretary, said he considers Vasconcellos’ warning premature. Noting that Deukmejian and legislative leaders have met five times since the beginning of the year to discuss budget issues, Brett said, “It may be a little too early for gloom and doom predictions.”

Still, Brett acknowledged that despite the high-level budget discussions “there is no progress to report.”

Brett blamed the stalemate on Democrats’ refusal to agree with the governor on the need to:

- Suspend automatic cost-of-living increases in support payments to the 1.7 million Californians receiving Aid to Families with Dependent Children.

- Freeze supplemental Social Security income payments to 800,000 aged, blind and disabled people.

Deukmejian believes that legal spending obligations, such as automatic increases to AFDC recipients, are responsible for the budget problem.

Vasconcellos and Assemblyman Terry B. Friedman (D-Los Angeles), chairman of the health and welfare subcommittee of the Ways and Means Committee, said that given Deukmejian’s opposition to the tax increase, Democrats in the Assembly are digging in their heels on the issue of guaranteed cost-of-living increases for welfare recipients.

“We are not going to do it,” said Friedman of the governor’s proposal to suspend welfare payments. Under the law now, a family of three receiving AFDC would receive a $32 increase in its $663 monthly payment to pay for food, rent, clothes and other essentials. But Deukmejian has proposed a one-year freeze on benefits, part of a plan to free up $337 million to be used to stave off cuts in mental health and other programs. Since the payments are guaranteed in law, the governor’s proposal would require a special bill that majority-party Democrats could easily defeat.

Vasconcellos said, “I will not vote to reduce the food supply of kids already living in poverty.” The assemblyman argued that the governor’s proposed budget cuts, taken collectively, will affect millions of poor, elderly and sick Californians.

The Ways and Means chairman again assailed Deukmejian for insisting on budget cuts that he argued are “penny-wise and pound foolish.”

These include proposals to eliminate the Office of Family Planning, for a savings of $36 million; cut $36.9 million in funds for local juvenile justice programs, and suspend a state payment to the State Teachers’ Retirement System.

In addition, Vasconcellos noted that Deukmejian wants to save $40 million during the next fiscal year by postponing one payment to doctors and hospitals participating in the Medi-Cal program, and is recommending that plans to open two new state prisons be delayed to save $35 million in operational costs.

Vasconcellos called the budget moves “bizarre.” He said the state may end up footing the bill for unwanted pregnancies that develop if poor women are denied birth control information because of the proposed shutdown of family planning services.

He argued that youths now confined in county ranches and camps could end up in the California Youth Authority at a substantially increased cost to the state. And he noted that in return for suspending the teachers’ pension fund payment one year, Deukmejian has agreed to benefit improvements for retired teachers that will cost the state an estimated $400 million a year annually beginning in 1990-91.

Lawmakers from both parties have been hoping that the final update on estimated budget revenues and expenditures--due out in mid-May--will show a significant improvement in revenues because of the robust performance of the economy since Jan. 1.

But the latest revenue report from the legislative analyst’s office shows the gain to be in the range of $125 million, not nearly enough to make up for the $1.6 billion shortfall that Vasconcellos argues is needed to stave off Deukmejian’s proposed budget cuts, finance current expenditures and provide state and local agencies with inflation-adjusted increases.