Bond Issues Are Likely to Ease, Not Cure, Budget Woes : Spending: Even the new money won’t stretch far enough to keep up with problems, officials say.

Although voters approved billions of dollars in new state spending in Tuesday’s election, the mix of ballot measures and bond issues will only help, not cure, California’s budget woes.

Though voters approved all the money issues Gov. George Deukmejian and the Legislature requested in Tuesday’s election, there is a broad consensus among state officials that the money just won’t stretch far enough for them to keep up with record school enrollments, overcrowded prisons, increasingly expensive health and welfare programs and the other strains of an unprecedented migration of new residents into California.

Already, in the wake of voter approval of a record $5 billion in bond measures, new bond proposals are being prepared for the November ballot to provide even more money for school and prison construction.

Proposition 111, the measure that will loosen up the spending limit and trigger a phased-in 9-cent-a-gallon gasoline tax increase, will have the most immediate impact on spending programs.

The combination of Proposition 111 and a companion measure, Proposition 108, a $1-billion mass transit bond proposal, means that an extra $950 million will be available for various transportation projects in the new budget year that begins July 1. By approving Proposition 108 and Proposition 116, a $1.99-billion rail bond issue, voters gave their approval to a transportation package that will provide at least $18.5 billion in new money for highways, rail lines and public transportation over the next 10 years.

The initial 5-cent-a-gallon increase in the gasoline tax takes effect at the gas pumps Aug. 1.

Passage of Proposition 111 and bond measures on Tuesday’s ballot provided a huge psychological boost to state officials, who since January have been grappling with a plethora of budget problems.

For weeks, work on the governor’s proposed $53.7-billion budget has been at a virtual standstill as state officials awaited the outcome of Tuesday’s voting.

An elated Deukmejian, one of the sponsors of Proposition 111, said at a Capitol news conference Wednesday morning that the voting signaled “thumbs up” to various highway, school, prison and other building projects.

Senate President Pro Tem David A. Roberti (D-Los Angeles) predicted that the successes in the election will have a spinoff effect and “lead to successful negotiations over the state budget.”

In addition to providing new money for transportation programs, Proposition 111 amended two key sections of the California Constitution dealing with the spending limit and school funding.

The measure did not eliminate the limit, but it changed the formula used to set the spending cap in a way that will give state officials substantially more flexibility in dealing with budget problems. The state, which has been bumping against the spending cap for several years, now is not expected to hit the ceiling until the late 1990s. As a result, there is little likelihood that taxpayers will get another income-tax rebate comparable to the one they received in 1987 when the state had to return $1.1 billion because it was that much over the limit.

Proposition 111 also amended provisions of an earlier measure, Proposition 98, the landmark school funding initiative approved by voters in 1988. Even with the amendments, schools will still receive their Proposition 98-guaranteed share of 40% of general purpose state tax revenues.

What the changes in the spending limit mean, more than anything, is that state officials now will have the flexibility to raise taxes, or enact measures that will raise more money to meet the budget problem, without having to worry about going over the ceiling.

The state began the year about $1.8 billion short of what it would take to fund the governor’s proposed $53.7-billion budget for the fiscal year that will begin July 1. Since then, the budget gap has grown to about $3.6 billion, largely because of a drop in tax receipts caused by a worsening economy and unexpectedly high costs of Medi-Cal and other programs.

The billions in new spending approved by voters will have no direct effect on the general budget problem--transportation programs are funded separately through the gasoline tax and bond programs are also outside the budget mainstream, although principal and interest payments come from general purpose tax revenues. So, even with passage of Proposition 111 and changes in the spending limit, the state treasury is still without enough funds to pay for the existing level of state services. That means that either taxes will have to be raised or programs cut.

Deukmejian, during his news conference, said that he is still opposed to a general tax increase to help solve the problem.

The Republican governor said he will continue to insist that the Legislature enact changes in budget law that now guarantee annual cost-of-living increases in health and welfare programs, indicating he believes the revenue gap can be closed by cuts.

Others believe that some kind of a revenue increase is required. Roberti said he will ask Deukmejian to reconsider revenue-raising proposals the governor proposed two years ago and then withdrew after they were criticized as a tax increase.