Rare Alliances Formed for State Fiscal Accord : Urgency of Health, Education and Transit Needs Brought New Alignment of Powers in Sacramento

A rare convergence of interests by the most powerful players in California’s business and political establishment led to the historic agreement on a 10-year, $18.5-billion transportation plan and the biggest rewriting of state financing laws since Proposition 13.

The series of votes late Friday ratifying the agreement by lopsided majorities in the Assembly and Senate challenged two of Sacramento’s best-known stereotypes--a confrontational governor who until now prided himself in wielding his veto power like a truncheon, and a Legislature so divided by internal politics and self-interest that it could accomplish little of lasting importance.

After it was over, Gov. George Deukmejian, who will not run for reelection next year when his second term expires, was able to say proudly: “We’ve done what the people have sent us up here to do on these kinds of major problems.”

The governor and the Legislature were able to break these old patterns, many believe, because they were confronted with issues that were simply too urgent to be swept under the table.

For one thing, the governor and Legislature were forced to meet a midnight Friday legislative deadline in order to use a portion of a $2.5-billion tax windfall on financially troubled health and welfare programs during the current fiscal year, which began Saturday.

Also prodding them to act were dozens of business, transportation, health, welfare, education and other groups. For months they have been pressing state leaders to do something about the state’s declining and congested transportation system and the ever-tightening financial noose put on state government by a constitutional spending limit approved by voters in 1979.

A short list of groups supporting one of the measures enacted Friday night--a proposed constitutional amendment to substantially repeal the spending limit--included the California Chamber of Commerce, state universities, coalitions of cities and counties, the California Taxpayers Assn., the League of Women Voters and doctor, hospital and health groups.

Pushing from another direction were land developers, building trades unions, pavers and contractors, and numerous corporations who wanted the Legislature to enact a sales tax increase to raise money for road construction and mass transit projects .

Results of Accord

The result was a series of bills that, voters willing, would:

- Create an $18.5-billion, 10-year transportation and mass transit funding plan based on a 9-cent-a-gallon increase in the gasoline tax, a sharp increase in truck weight fees and three separate $1-billion bond issues.

- Place on the June, 1990, ballot a constitutional amendment to relax the limit on government spending and repeal key provisions of Proposition 98, thus freeing up billions of dollars for health, welfare and other programs.

- Provide for a two-year, $1.4-billion public school and community college funding program highlighted by a plan that will provide extra financial aid to rural and suburban school districts who believe they have been shortchanged in the past by funding formulas weighted toward big-city districts.

“The governor and our legislative leaders have achieved a near miracle by fitting together all the pieces needed to make the budget work,” said Kirk West, president of the California Chamber of Commerce.

Until the successful conclusion of the negotiations, Deukmejian had a well-deserved reputation as a rigid, combative governor who seemed to take pride in the nickname legislators had given him for his unyielding style--”the Iron Duke.” For years, Democrats, with comfortable majorities in both the Assembly and Senate, had mimicked Deukmejian’s style, at times becoming just as intransigent on important issues as the governor himself.

Battle Weary Crew

Senate President Pro Tem David A. Roberti (D-Los Angeles) said one of the reasons the talks with the governor went so well was that “everyone is war weary from previous battles.”

Lawmakers from both parties said they sensed that Deukmejian was drawn to the negotiating table by his strong desire to solve the state’s transportation crisis before leaving office.

“I think he recognized he had a unique opportunity,” Assemblyman Richard Katz (D-Sylmar) said. “He could have been looked upon as the governor who did less for roads than (former governor) Jerry Brown, or he could be part of the group that got California back on track. I think he made a conscious choice to do the latter.”

Assemblyman William P. Baker (R-Danville) said Deukmejian, without an eye toward reelection, was free to look at the “big picture” rather than focus on the point of view of those who helped elect him.

“It was just that it wasn’t going to get done unless someone grabbed it by the horns, and he decided to do that,” Baker said.

Deukmejian, despite his reputation as a stubborn bargainer, abandoned his longtime resistance to changing the Gann spending limit and also backed away from his insistence that the gasoline tax not be raised without the issue being placed directly before the voters.

No ‘Absolutes’

“He had more of a sense of wanting to solve the problem and being more open to other peoples’ points of view of how big the problem was,” Katz said. “He didn’t paint himself into a corner and refuse to budge. There were no absolutes.”

Roberti said Deukmejian seemed “much more relaxed” than he had in past negotiations. “It was almost like talking with George Deukmejian when you knew him as a state senator,” Roberti said.

But others say the real key to the deal struck Friday was the fact that health and welfare programs traditionally championed by Democrats stood to be the big losers if the Legislature did not modify Proposition 98 to permit use of the $2.5-billion windfall, which otherwise would have been given to schools and rebated to taxpayers.

“Proposition 98 locked in an ever-increasing portion of the budget for education at the expense of the welfare programs,” said Assemblyman Pat Nolan (R-Glendale). “The Democrats had to be more flexible because Republicans would rather the money go to education than to welfare. They had to be more reasonable. They didn’t make outlandish demands and threaten to hold their breath if they didn’t get their way.”

Assemblyman Steve Peace (D-La Mesa), who participated in the education negotiations, said both Republicans and Democrats were nudged toward agreement as the pressure increased from their traditional constituencies.

Pressure Groups

Real estate developers and road builders pushed Republicans, particularly a powerful and conservative bloc of lawmakers known as “Cavemen,” for a gasoline tax increase to pay for new highways to serve suburban developments. Health and welfare providers pushed the Democrats to rewrite Proposition 98 to avoid deep cuts in programs that serve the poor. Education interests worked with both parties to lock in their share of the funding while giving up enough to avoid a political backlash against education programs.

“It shows what can be done when you have all the powerful special interests on the same side,” Peace said.

Despite the euphoria inside the Capitol, the real test of success or failure of the package will come next June, when voters will decide whether to double the state’s gasoline tax and increase the spending limit to a point that may never again trigger a tax rebate.

The ballot language agreed upon as part of the package is less than direct in its description of the measure, which would be known as “The Traffic Congestion Relief and Spending Limitation Act of 1990.” The language notes that the measure would “update” the spending limit to allow new funding “for congestion relief, mass transit, health care, services for the elderly” and other programs.

The statement also mentions an increase in truck weight fees before noting that the measure would raise the fuel tax 5 cents in 1990 and 1 cent each year for four years after that.

Some Are Skeptical

Peace said he believes legislators are overestimating the will of middle-class Californians to tax themselves, no matter how serious the state’s problems might be. Another dissident, Assemblyman Richard Mountjoy (R-Monrovia), said he does not believe the voters would be “fooled” into lifting the constitutional spending limit.

Deukmejian, however, said Friday night that he is “confident” that he and other supporters of the plan will be able to win voter approval of the proposed constitutional amendment. The governor said he plans to campaign “very actively” for the measure.

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