Democrats Give In, Support Cutbacks : Budget: Leaders announce backing for $1.5-billion package that would affect health, welfare and prison programs. Plan also contains widespread tax hikes.

Top Democrats in the Assembly and Senate, moving the Legislature closer to a budget agreement, announced support Thursday for an expanded package of $1.5 billion in service reductions that would hit dozens of health, welfare and prison programs.

Legislative leaders--hoping to capitalize on the momentum generated by the agreement on the cuts and a Republian proposal earlier this week to raise $729 million in taxes and fees--immediately scheduled rare Saturday and Sunday floor sessions for votes on tax and budget bills.

Lawmakers and aides cautioned that agreement was far from certain as they worked Thursday to put together a bipartisan consensus on a budget package.

They are trying to overcome a $3.6-billion gap between revenues and expenditures. Gov. George Deukmejian has proposed bringing the budget into balance through budget cuts alone, but Democrats are demanding that a substantial part of the gap be addressed through tax increases.

The stalemate has left the state without a budget and the legal authority to spend money since Sunday, the start of the 1990-91 fiscal year.

In the Assembly, meanwhile, Republicans blocked an attempt to allow the state to pay $95 million owed to nursing homes, hospitals and doctors for treating poor people in the Medi-Cal program.

The bills are for services performed in the fiscal year that ended last Saturday. State Controller Gray Davis said he can’t pay them without authorization from the Legislature. But many Republicans refused to vote for the amended measure because it included money to pay for abortions. Democrats are expected to seek the authorization again today.

The agreement on the expanded package of budget reductions came after Assembly Speaker Willie Brown (D-San Francisco) joined Senate President Pro Tem David A. Roberti (D-Los Angeles) in agreeing to cut into $260 million in legally mandated benefit increases for welfare recipients and aged, blind and disabled persons receiving state aid.

Also on the Democrats’ expanded list of cuts is a $21-million reduction in aid to counties to help support trial courts, about $100 million in other county-related health services for the poor and a $73-million reduction in contributions to the Public Employees Retirement System pension fund.

The Democratic budget cutters are holding firm on their refusal to make cuts in Proposition 98-related funding guarantees for public schools. Deukmejian wants to suspend Proposition 98 and slash financial aid to schools by $800 million.

Democrats also remain opposed to Deukmejian-proposed cuts of $48 million in services to the mentally ill, $68 million in programs for elderly shut-ins and others who receive in-home support, $33 million in county programs for youthful offenders and $27 million in child welfare services.

The agreement between Brown and Roberti followed a proposal Tuesday by Senate Republican leader Ken Maddy of Fresno that would raise state taxes and fees by $729 million this year.

Maddy, in breaking a solid front of Republican opposition to tax increases, made his support for the tax and fee package conditional on extra budget cuts by Democrats.

With the agreements by Democrats on $1.5 billion in cuts, and Maddy’s proposal for $729 million in tax and fee increases, budget negotiators were still roughly $1.3 billion short of solving the $3.6-billion problem that has bedeviled them since May.

But a number of proposals for further tax increases were being drafted Thursday.

One is a change in motor vehicle license fee schedules that would raise $350 million. A similar proposal was put up for a vote last week in the Senate and defeated. In addition, there is a proposal that would generate $623 million by incorporating federal tax law changes into California’s tax codes, which has received bipartisan support in the past.

Times staff writer Daniel M. Weintraub contributed to this story.