Senate Budget Panel Uses Windfall to Pay for Pared Programs

Helped by an unexpected $2.5-billion revenue windfall, the Senate Budget and Fiscal Review Committee agreed on a nearly $50-billion state budget Tuesday, voting to spend nearly all of the new money on programs recommended for cutbacks by Gov. George Deukmejian.

The spending plan, passed on an 11-0 vote, is conditioned on the satisfactory conclusion of negotiations under way between the governor and legislative leaders on a variety of complex budget issues.

The committee-approved budget cannot be implemented unless Deukmejian and leaders of the Assembly and Senate, who have been negotiating in private for weeks, reach an agreement in the next week or two.

The overriding problem facing Deukmejian and legislative budget writers is that the state is prevented from spending the bulk of the tax windfall because of a constitutional limit on government spending approved by voters in 1979.

“There needs to be agreement quickly on a revenue plan that will support the budget,” said Sen. Alfred E. Alquist (D-San Jose), the committee chairman.

In the meantime, Alquist and the Republican and Democratic budget writers who sit on his committee showed that they have been listening to their constituents. Under intense pressure from mental health groups, hospital and medical associations, county governments and others to restore the cuts proposed by Deukmejian, the legislators did just that.

The recommended cuts were contained in the $47-billion proposed budget that Deukmejian sent the Legislature in January. The governor’s budget did not anticipate the $2.5-billion revenue windfall that state finance officials say has developed because of stronger-than-expected income tax payments from individuals and corporations.

The bulk of the proposed new spending in the committee-approved budget--nearly $1.5 billion of the $2.2 billion that Senate lawmakers want to add to the governor’s budget--is in health and human services programs.

Alquist said most of the programs have “been underfunded for many years.”

Deukmejian’s budget proposals generally fared badly, but that was especially so in the $27-billion health and human services portion of the proposed $49.7-billion budget put together by the committee.

For one thing, the committee rejected the Deukmejian plan to make up for cuts he proposed in various health programs by using new tobacco tax revenues generated by Proposition 99. The committee voted to ignore the governor’s proposed cuts and spend $400 million more than he wanted on the programs. It decided to spend the tobacco tax revenues on a variety of other health programs.

A budget subcommittee headed by Sen. Bill Greene (D-Los Angeles) earlier voted to increase the amount going to immigrant education programs by $100 million over the amount proposed by Deukmejian. The subcommittee also voted to augment county health programs for the working poor by $70 million, and it recommended the complete restoration of the $34.6-million budget of the Office of Family Planning, which administers grants to local agencies that dispense birth control and other information to the public. Deukmejian wants to abolish the agency.

The committee’s version of the budget also restores $232.9 million to provide 4.6% increases in basic food and housing payments to welfare recipients and aged, blind and disabled persons receiving supplemental income assistance from the state.

And the proposed spending plan would add $97 million to state-supported research, treatment and education programs to combat AIDS, increase spending on mental health programs by $180 million, and provide an extra $140 million to county Medi-Cal programs. Homes providing foster care would also receive a budget increase of $25 million, enough to increase their allotments from the state by 4.6%.

Since the recent surprise discovery of the extra tax revenues, Deukmejian Admininstration officials have indicated that the governor may be willing to back away from some of his more severe budget cuts. But they have made it clear that future decisions are directly linked to the negotiations under way between Deukmejian and leaders of the Senate and Assembly.

Other Proposed Changes

On the bargaining table are proposed changes to the voter-approved cap on state spending; possible amendments to Proposition 98, the landmark initiative that guarantees public schools and community colleges a fixed share of the state budget, and a proposal to raise $20 billion over the next 10 years for transportation projects.

Since the state is operating at near the legal spending limit, it does not have the authority to spend the bulk of the windfall money on general state programs. Law requires that surplus revenues either be given to public schools or rebated to taxpayers.

The committee action sets up the final phase of budget deliberations that will lead to approval of a budget for the new fiscal year that begins July 1. The full Senate is scheduled to vote on the budget Thursday. The Assembly Ways and Means Committee will complete its version of the budget today, and a floor vote by the full house probably will be taken next Monday.

Differences between the two versions of the budget will be hammered out by a conference committee that will begin deliberations during the middle of next week. The Legislature has until June 15 to complete its work on the budget, but it has missed its deadline five of the last eight years.