Negotiations to Agree on Budget Falter

Republican and Democratic negotiators retreated from earlier positions on spending reductions and tax increases Friday, slowing down work on an already-overdue state budget.

Legislative leaders said the Assembly and Senate would work today and Sunday, but they held out little hope that agreement could be reached before the end of next week.

“We’ll be here a few days,” said Assembly Speaker Willie Brown (D-San Francisco) after a meeting with Senate President Pro Tem David A. Roberti (D-Los Angeles) on the Senate floor.

Lawmakers had been scheduled to adjourn Friday for a monthlong recess. “I don’t think we can--or should--leave town without a budget,” Brown said.

The lawmakers are working to produce a combination of spending reductions or tax increases that will total $3.6 billion, which is said to be the size of the gap that exists between available tax revenues and service requirements.

Gov. George Deukmejian has issued a budget that would increase spending by 7.4% and he is holding firm against tax increases. Democrats are pressing for a budget hike of more than 13%, arguing that soaring school enrollments, prison inmate populations and fast-growing welfare rolls are producing more demands for spending than the tax structure can support.

Although negotiations are still wide open, sources said a $729-million tax proposal by Senate Republican Leader Ken Maddy of Fresno is under intense fire. With Republicans expressing little support for Maddy’s proposal or other tax-increase measures, Democrats were pulling back from their agreements on spending reductions.

Brown said lawmakers were “peeling off” various tax proposals because of lobbying pressure put on them by various interests whose businesses or industries would be hit by tax hikes.

In the face of opposition to tax increases, Roberti, the Senate leader, began backing away from a $1.5-billion package of spending reductions he supported as recently as Thursday.

Roberti said that in order to back the kind of budget reductions sought by Deukmejian and GOP legislators, Democrats would have “to see $1 billion in revenues (tax increases).”

Maddy said: “We don’t think there are enough cuts, they don’t think there are enough revenues, so we are trying to work it out.”