Impasse Over State Budget Still Stands : Funding: A meeting between Deukmejian and lawmakers gets nowhere. The governor won’t accept proposed tax and fee hikes.

Seven days into the new fiscal year and still without a budget or a plan to pay the state’s growing backlog of bills, Gov. George Deukmejian and legislative leaders met Sunday and talked philosophy.

Seemingly no further along after their 10th meeting than they were when they began serious talks in June about the budget crisis, lawmakers emerged from the meeting in the governor’s office echoing verses from the same record they have been playing for five weeks.

On Saturday, Senate leaders had said they were hopeful that Sunday’s meeting would be productive.

The top Republican and Democratic leaders expected to be able to lay a budget-balancing plan before the governor that involved cuts of $1 billion from the proposed $56-billion state budget and revenue hikes of $1 billion in assorted tax and fee increases. It was considered a plan that would allow both Republicans and Democrats to save face, something considered essential to any compromise.

But the plan never got off the ground.

Senate President Pro Tem David A. Roberti (D-Los Angeles), who put together the proposal with Republican Leader Ken Maddy of Fresno, said Sunday it was still being fine-tuned.

But Roberti acknowledged that it didn’t help when Deukmejian, even before they had a chance to lay the deal out, indicated “he wasn’t too excited about” about the $1 billion in tax and fee increases.

With that out of the way, “the discussion was more philosophical,” said Deukmejian Chief of Staff Michael R. Frost. He added, “There is no change in philosophy.”

Later, both the Senate and Assembly held a rare Sunday floor session, but little was accomplished.

Privately, some lawmakers were saying that the convening of the two houses had more to do with fear of going home without working on the budget than with actual efforts to pass a budget for the 1990-91 fiscal year that began July 1. Last week, Assembly Speaker Willie Brown (D-San Francisco) acknowledged as much when he said lawmakers wouldn’t “dare” take the weekend off until they passed a budget.

There were indications that many of the 120 members of the Legislature were just beginning to wake up to the fact that the state faces a severe budget crisis.

Frost, who is part of the governor’s lobbying effort with the Legislature, said Sunday that “the members are just now getting to the point where they understand the depth of the problem.”

This is the way things stood Sunday:

The Republican governor still does not want tax increases, believing that the state can and must live with budget reductions of $3.6 billion, since spending would grow 7% to 8% even with cuts of that magnitude.

Democrats still claim that Deukmejian isn’t living in the real world if he thinks that the Democratic-controlled Legislature would go along with those kinds of cuts, saying that Deukmejian’s 7% growth is not nearly enough to keep up with huge increases in welfare caseloads, public school enrollments and state prisoner populations.

Aggravating the problem is the fact that the state officeholders, in facing the funding crisis, have virtually been put in a straitjacket by a variety of legal requirements, court decisions, voter-approved initiatives and federal laws.

This likely will be Deukmejian’s last fight with his long-term adversaries, Brown and Roberti. He is leaving office early next year, retiring to private life. Rather than go quietly, the lame-duck governor has drawn the proverbial line in the sand and refuses to yield.

Frost, when asked how far apart the two sides were, said, “$3.6 billion.”