State Can’t Meet Its Deadline on Budget : Finance: The governor and legislators, split by philosophical differences, call a halt to talks. Some state checks will be delayed.

The Legislature Wednesday gave up trying to pass a budget in time for the start of the new fiscal year and Controller Gray Davis promptly announced he will begin holding up some state checks as of Sunday.

As the state’s growing financial troubles reached a new level, Gov. George Deukmejian and legislative leaders--split by what participants described as deep philosophical differences over tax increases and spending cuts--called a temporary halt in their budget negotiations.

The talks are expected to resume Monday. Deukmejian Chief of Staff Michael R. Frost said the delay means that there is “no chance” there will be a budget by Sunday, the beginning of the 1990-91 budget year.

This will mark the fourth straight year that the state has entered the fiscal year without a budget. The longest delay in approving a budget bill was in 1983, when it was not signed by the governor until July 21.

Davis said that not all state payments will be stopped immediately. Bills and payments for work performed in June will be paid.

But, the controller said: “Without a budget, I have no authority to pay for services incurred after June 30.”

The first to miss their payments, he said, will be in-home care workers who provide support services for elderly shut-ins and others who are immobilized and unable to care for themselves.

The controller said the welfare workers will get paid as soon as a budget is approved. “The state has always honored its obligations. We will expedite payments as soon as a budget is enacted,” Davis said.

Additional obligations that the state may not be able to meet, Davis said, are a Monday payment of $195.2 million to the federal government as the state’s share of a Social Security supplemental income program; July 5 payments to counties to operate welfare programs; a July 6 payment of $196 million to Medi-Cal program providers, a July 12 distribution of $341 million in sales tax revenues to local governments and another $140-million payment to doctors, hospitals and other Medi-Cal providers the same day.

Delays on these payments come on top of a $103-million payment to Medi-Cal providers that has been held up since June 18.

Davis said a $471-million payroll for state employees due at the start of July will be paid because the money was appropriated in the current 1989-90 fiscal year budget. Two payments to state retirement systems will also be paid because the money was approved in the current year’s budget.

Just when a budget will be enacted remains to be seen.

Deukmejian and legislative leaders held another of their closed-door meetings Wednesday, but no progress was made and all parties seemed to believe a weekend cooling-off period, as one participant described it, would help.

The problem stems from a $3.6-billion revenue gap. Deukmejian and Republicans insist that most of the money be made up through cuts in the proposed $56-billion budget for 1990-91. Democrats, on the other hand, are insisting that a portion of the budget problem be made up by tax or fee increases.

Frost said Deukmejian, who earlier this week proposed $3.6 billion in deep budget cuts to a variety of health, education and welfare programs, said that “we are obviously very, very far apart.”

Deukmejian said the break in talks will provide time for legislators to reconsider their positions. “They are going to have to understand the seriousness of the problem and that there are going to have to be some serious moves made to solve this problem,” he said.

Senate President Pro Tem David A. Roberti (D-Los Angeles), who has proposed tax and fee increases of roughly $1.6 billion, said Democrats were “deeply” opposed to the kind of budget reductions outlined in Deukmejian’s program.

Senate Republican Leader Ken Maddy of Fresno said after the meeting: “My people (Senate Republicans) will stay here till hell freezes over before they will vote for a $2-billion tax increase.”