Assembly Sets Stage for New Budget Talks : Legislature: Both houses approve funds to resume payments of tax refunds and renter’s credits. But Republicans keep bill from going to governor.

The Assembly passed and sent to the Senate a $56-billion state budget Monday, setting the stage for creation of a two-house negotiating committee that will do the hard bargaining needed to close a $3.6-billion revenue gap.

Passage of the budget, which had been defeated last Thursday, came on a 54 to 20 vote that barely gave it the two-thirds majority needed for approval.

The spending plan, opposed by Republicans because they say it cannot be balanced without a tax increase, was sent to the Senate for a procedural vote required to create the six-member conference committee.

In other action, both the Senate and Assembly approved a much-delayed $332-million emergency appropriations bill that would allow the state to resume payments of tax refunds and renter’s credits to more than 300,000 Californians.

Republicans in the Assembly kept the bill from going to the governor because some of the money in the legislation would be used to pay for abortions for poor women and they want another chance to vote on it.

The Senate voted first, passing the appropriations bill 27 to 4. The legislation was then rushed to the Assembly, where in a quick vote it was approved 56 to 3. However, Republicans complained later that the vote was taken so quickly it caught some GOP lawmakers off guard. Democrats agreed to give the Republicans a second chance to vote on the measure when the Assembly reconvenes Thursday.

Action on the emergency appropriations bill came about two hours after the Senate Budget and Fiscal Review Committee, where the legislation has been stalled since Thursday, unanimously approved the measure.

The way for passage of the emergency legislation was cleared after Finance Director Jesse R. Huff sent a “clarification” letter to committee members saying the Deukmejian Administration fully supports the legislation, including a $34-million appropriation that will allow resumption of payment of all tax refunds and renter’s credits.

A Department of Finance official testified last week during the committee hearing that the Administration would like additional renter’s credit appropriations rolled over into the new fiscal year that will begin July 1. The reasoning then was that such a move would give the state a stronger financial cushion during the current budget year.

However, on Monday, Assistant Finance Director Cynthia Katz said the Administration had never intended to hold up the legislation. The extra appropriation for the renter’s credit was not debated Monday.

As for the main budget bill, a group of Republicans once again tried to block its passage, as they did Thursday, warning that its approval would be a prescription for a tax increase.

But Republican leaders joined Democrats Monday in voting for the $56-billion budget--which is about $2.6 billion higher than Gov. George Deukmejian’s proposed budget--in order to get conference committee negotiations under way.

In arguing for passage of the budget bill, Assemblyman William P. Baker (R-Danville) vowed that he will work to close the $3.6-billion revenue gap through budget cuts. “We are never going to approve a tax increase,” Baker promised. “Never.”

But other Republicans said they did not believe him.

Assemblyman Tom McClintock (R-Thousand Oaks), openly critical of GOP leadership, said, “I am very skeptical of any agreement between the current leadership and the governor. I believe that every indication is (the agreement) will be some very large permanent tax increases in exchange for some cosmetic and face-saving changes in welfare COLAS (cost of living adjustments).”

Assemblyman Gil Ferguson (R-Newport Beach), on the losing side of the vote with McClintock, said even though the budget will undergo substantial revisions over the next two weeks, “We want to stop it now before there is a tax increase.”