Legislators, Honig Wrangle Over Changes in School Fund Guarantees

With time running out on a state budget agreement, legislative leaders indicated Thursday that proposed long-term changes in Proposition 98, the landmark school-funding initiative approved by voters last year, remain the biggest stumbling block to a settlement.

The importance of Proposition 98 was underscored by a flare-up of tempers among key negotiators during an airing of differences on the initiative measure.

Senate Republican Leader Ken Maddy of Fresno emerged from the session calling state schools chief Bill Honig’s refusal to further yield on Proposition 98 “the lone obstruction” to a complex budget agreement that must be approved by June 30, the end of the current fiscal year.

As for Honig, he accused Maddy of trying to “cut the heart out of Proposition 98.” Honig added that he believes that the Republican leader’s intractability “threatens the budget agreement that everyone seems to want.”

The meeting took place in the office of Senate President Pro Tem David A. Roberti (D-Los Angeles). Also in attendance were Assembly Speaker Willie Brown (D-San Francisco) and Assembly GOP Leader Ross Johnson of La Habra.

The political leaders left the meeting shortly after Roberti gave Honig what was later described as “a very candid” and critical assessment of what he considered flaws in the school chief’s position. Roberti characterized his comments as “frank and emphatic.”

At stake is a plan to spend $2.5 billion in windfall tax revenues on a variety of health, welfare and education programs, proposed modifications to the voter-approved government spending limit, and a new 10-year, $18.5-billion transportation improvement program.

Without agreement on a proposed constitutional amendment repealing provisions of Proposition 98, legislators fear that the transportation plan they painstakingly negotiated over a period of weeks could fall apart. Even worse, from their perspective, they would be forced to rebate the bulk of the windfall back to taxpayers and turn over the rest to local school districts at a time when hospital and health programs are facing severe budget cutbacks.

Negotiations over long-term changes in Proposition 98 are different from other talks going on now over ways to implement the initiative. In separate meetings, lawmakers are wrangling over how to spend the roughly $1.5 billion that will go to schools this year and next because of Proposition 98.

Budget forecasters believe that unless provisions of Proposition 98 are repealed, funding formulas built into the California Constitution eventually will give the schools a 46% or 47% share of the state budget, well above the 40% contemplated when voters approved the measure. Most of the big increases in the future will accrue to the schools because Proposition 98 gave them the first call on future budget surpluses.

Honig, who led the drive to pass Proposition 98, has agreed to surrender the guarantees to surplus tax revenues that the schools now have, a constitutional provision that this year could net schools an extra $500 million and even more next year. The school chief estimated that he is giving up what could add up to roughly $5 billion in extra funding for schools over 10 years.

But, in return, Honig said, he wants ironclad guarantees that the public schools and community colleges will receive the 40%-plus share of the state budget that Proposition 98 promised.

Maddy has taken a hard-line position that the Legislature cannot afford to make permanent guarantees of 40% of the budget because it would tie the hands of the lawmakers in lean years when recessions drive down tax receipts.

The major sticking point is how to deal with recession-related downturns, with Maddy asking for maximum freedom and Honig refusing to yield on the 40% guarantee.

Legislators could strike an agreement on Proposition 98 without having to deal with the flinty Honig. But both Maddy and Roberti believe that the schools chief is vital to the agreement because PTA groups, school districts and teachers unions generally have agreed to allow Honig to be their spokesman on Proposition 98.

“He speaks for education. He was the architect of Proposition 98. That combination has an influence on members of the Legislature, including me,” Roberti said. “I don’t see the world the way (Honig) does, but the reality is that he holds a pretty good poker hand--that is, Proposition 98.”

Maddy said, “(Honig’s) position is that if you attempt to modify (Proposition) 98 in any way that I don’t like, we will send all our forces against you.”