$53-Billion State Budget Offered : Finance: The governor’s proposed spending plan would cut $1 billion from aid to counties, the poor, aged and disabled. It would boost spending 7.3%.

Gov. George Deukmejian submitted his last budget to the Legislature on Wednesday, a $53.7-billion spending plan that calls for cuts of more than $1 billion in financial aid to poor families, counties, the elderly and disabled.

Overall, Deukmejian’s proposed 1990-91 budget would boost spending by 7.3%, a relatively healthy jump. But this still leaves the state $1.9 billion short of what the Deukmejian Administration said would be needed to meet all budget demands.

Deukmejian, who will leave office this year after completing his second term, described his last budget as “realistic, responsible and sufficient to meet the needs of our growing state,” during a breakfast speech to the Comstock Club, a capital civic group.

“It is a budget that embraces a compelling economic fact of life. It’s a fact that everyone in business, every family, every individual has to face in this state. We can’t spend what we don’t have. We must live within our means,” the Republican governor said.

Certain to encounter stiff opposition in the Legislature, the governor’s budget is twice as big as the first state spending plan he introduced seven years ago. The new proposed budget would:

-- Allocate nearly 41%, or $17.8 billion, of the state’s general purpose tax revenues to public schools and community colleges because of requirements of Proposition 98, the landmark school funding initiative approved by voters in 1988. Despite an 8% spending increase, public school funding per student actually would decline next year because schools will get less after adjusting for inflation.

-- Provide all other budget programs with a total of $25.5 billion, a 5.2% increase over last year. But with welfare rolls and prison and medical costs rising 11% or more, there is not enough money in this pot to avoid deep cuts.

--Reduce by $91.6 million the state’s program to train welfare recipients for jobs, called Greater Avenues for Independence (GAIN), despite a 6.4% increase in the number of Californians on welfare. Deukmejian’s budget would lop 164,000 people from the program.

-- Use bonds to keep state borrowing at record levels. Deukmejian would like to put $5 billion in bond measures before voters this year on top of the $1.9-billion rail bond initiative already approved for the June ballot. Even without approval of the new bond measures, the governor’s new budget anticipates that principal and interest payments in the new budget year will jump from $524 million to $609 million.

-- Trim about 45,000 people from the state’s program to provide support services to elderly and sick shut-ins. The budget proposal, designed to save $71.1 million, would change eligibility requirements to provide benefits only to those “who are the most physically limited.”

--Change the law to allow a cut of $268.8 million in legally required inflation adjustments to welfare recipients, counties, doctors and hospitals on the Medi-Cal program, elderly people who receive supplemental Social Security payments and those receiving in-home support services. Benefits, scheduled to be increased 4.2%, would be frozen at current levels.

Reserve Fund

In addition, the budget would set aside $1.2 billion in a prudent “rainy day” reserve fund. It also would increase fees by $69 a year for full-time students at the University of California, bringing the average at UC campuses to $1,703. Fees for students in the California State University system would go up $36 per student, to a total of $744 a school year.

State Finance Director Jesse R. Huff, during a press briefing in the Capitol, said he anticipates months of discussions with lawmakers over the budget. “Everything in the budget is negotiable,” Huff said.

He said the debate will continue at least until May, when budget analysts prepare their final tax and expenditure figures. The Legislature is required to complete its work on the budget June 15, a traditionally elastic deadline. The budget is for the government budget year that runs from July 1 to June 30, 1991.

Legislative leaders immediately predicted strong opposition for many of the budget proposals, a number of which require a suspension of laws controlling individual programs.

Senate Senate Republican Leader Ken Maddy (R-Fresno) said he expects Democrats--and possibly some members of his own party--to reject many of the health and welfare cuts.

Maddy said the huge shortage of funds for health and welfare programs could lead to a push for a tax increase if voters approve a Deukmejian-backed measure in the June primary election to lift the constitutionally mandated lid on state spending.

When asked if he thought a tax increase would be necessary to finance the budget if the Legislature rejects Deukmejian’s plan, Maddy said: “It’s going to require that--obviously.”

Senate President Pro Tem David A. Roberti (D-Los Angeles) said he was “at a loss” to explain why Deukmejian was proposing to cut $91.6 million from the GAIN work program for welfare recipients. Roberti said the program “is a very significant attempt to give welfare people training, jobs, education and put them back to work.”

Roberti said Democrats would oppose the proposal to freeze welfare benefits and deny recipients a cost-of-living increase. “We’re going to restore those. It’s almost Democratic gospel to oppose elimination of COLAs,” he said.

Assemblyman John Vasconcellos (D-San Jose), chairman of the Assembly Ways and Means Committee, had praised Deukmejian on Tuesday after the governor, in his annual State of the State speech, outlined an ambitious agenda that includes a plan to help first-time home buyers of houses and support for health insurance for the poor.

The budget committee chairman called it “a decent speech by a decent man.”

But on Wednesday he said he changed his mind after reviewing the budget. “It’s an indecent budget,” he said.

Another of Deukmejian’s money-saving proposals is to delay paying $90 million in bills owed to doctors and hospitals for Medi-Cal services during the current fiscal year. Vasconcellos called the proposal “fiscally irresponsible.”

“It’s up to him to give us a budget that works. This one doesn’t work,” Vasconcellos said.

Deukmejian, in his speech to the Comstock Club, said he anticipated that his budget would run into political flak in the Legislature, and predicted that his audience would “hear a good deal of criticism in the coming days.”

The governor blamed most of the budget difficulties on what he called “structural” problems that require fixed levels of spending for schools, welfare recipients and various health and human service programs. Deukmejian said the problem is that while general purpose tax revenues are expected to grow by 8.4% in the new fiscal year, a healthy increase, legal requirements and inflationary pressures require an 11% increase in expenditures.

Describing the legal requirements as a “fiscal albatross,” the governor said “over 90% of the budget is locked into place, programmed and pressured to grow beyond our ability to pay.”

Deukmejian used the speech to again plug for a measure on the June ballot that would lift the voter-approved spending limit and pave the way for a gasoline tax increase.

Money for Portrait

Underscoring that this is Deukmejian’s final budget, the spending plan contains a $20,000 appropriation to pay for an oil portrait of the governor that will hang in the Capitol.

Outside the Capitol, Larry E. Naake, a spokesman for the County Supervisors Assn. of California, said the budget proposal hits counties especially hard. Among the proposed cuts is $150 million from a special program to aid financially distressed county health care systems. “We can’t continue to shift the financial burden of health care responsibilities from the state to the counties,” Naake said.

Los Angeles County officials said the proposed budget could result in nearly $100 million in total cutbacks in public health care programs locally.

Dr. William G. Plested, president of the California Medical Assn., said the budget “would severely exacerbate” what he called the state’s health care crisis.

“Once again, it appears that the sick and injured come last,” he said.

There has been widespread speculation that Deukmejian is on the verge of agreeing to a restoration of $24 million he cut last year from the state’s family planning program. But the budget does not restore the money. As it stands, the proposed budget includes $12 million for family planning.

Norma Clevenger, executive director of Planned Parenthood Affiliates of California, said Deukmejian’s actions are “callous, vindictive and fly in the face of common sense.”

LAME DUCK’S BATTLE--Deukmejian’s power may fade as his term nears an end. A18

SCHOOL SPENDING DROP--Spending per pupil would decline in proposed budget. A18

OTHER STORIES: A18, A19