Democrats’ Budget Plan Will Be Put to Test Today

Mounting what might be their last stand in the prolonged state budget battle, Assembly Democrats today are expected to force a series of votes on a $55.4-billion spending plan and a package of tax and fee increases.

If they fail to win passage of their latest fiscal package, Democratic leaders acknowledge, they are prepared to give in to Republican Gov. George Deukmejian’s demand that a $3.6-billion budget gap be closed entirely by cutting programs and not by raising new revenues.

“This is an attempt to play out our last best hand,” Democratic Assemblyman Mike Roos of Los Angeles said Wednesday. “I don’t know what else we can do.”

California has gone 19 days into the current fiscal year without a budget, prompting welfare recipients, hospitals and nursing homes to obtain court orders forcing the state to make scheduled payments without the Legislature’s authorization. In modern times, lawmakers have never gone longer into a fiscal year without passing a budget.

Today’s scheduled showdown will center on a budget proposal passed Tuesday on a party-line vote of an Assembly-Senate conference committee. Democrats voted for the plan while Republicans voted against it.

The proposed budget is balanced on the strength of about $1.3 billion in new revenues. The plan cuts about $1.7 billion from what would be needed to provide state services at their current levels for another year. Deukmejian would be expected to eliminate another $800 million to build the emergency reserve he says is necessary.

The spending and tax bills are contained in separate measures independent of each other. Republicans opposed to tax increases could block the revenue-raisers and still vote for the budget and the program cuts. Democratic Speaker Willie Brown of San Francisco has said he would support such a strategy.

But Assembly Republican leaders have said they plan to block both the revenue and spending sides of the proposal. They said the Democrat-drafted plan, stripped of its new taxes and fees, would force the governor to cut too deeply into programs Republicans value while not doing enough to curb spending on the health and welfare programs that make up much of the budget.

Deukmejian on Wednesday condemned the Assembly Democrats’ plan.

The proposal, he said, “lacks sufficient structural budget reforms and thus fails to control the automatic spiral of state spending.” Deukmejian said the budget, if enacted, would leave the next governor and Legislature with a $2.3-billion shortfall.

Democrats have insisted from the outset of the budget battle that the state’s books must be balanced with a combination of new revenues--taxes and fees--and program cuts. But in recent days, many members of the majority party have acknowledged that they cannot force that solution on the Republicans.

It takes two-thirds majorities in each house to pass a budget--27 votes in the Senate and 54 in the Assembly. Because Democrats control 45 seats in the lower house, they need help from at least nine Republicans. If those nine votes are not there, the Democrats can do nothing but wait, and many admitted they are getting tired of waiting.

The Democrats’ package is in two parts. One is a series of bills raising taxes and fees. The largest is a $630-million proposal to make the state conform with 1987 and 1989 changes in federal tax laws. The additional revenues would be generated by provisions that include further limiting tax deductions for business lunches and restricting deductions allowed to corporations for money kept in reserve for their employees’ vacation pay.

University of California and California State University fees would be increased 10%.

The $55.4-billion budget would increase spending by more than 10%. Even so, Democrats said, the spending plan is not sufficient to continue providing services at their current levels because the number of school children, welfare recipients and state prisoners is increasing faster than the state’s revenues.

Incorporated in the plan is a recommendation to save $260 million by eliminating legally required cost-of-living increases in welfare grants and aid to the aged, blind and disabled. Another roughly $30 million would be saved by cutbacks in drug purchases under the Medi-Cal program. The spending plan would also cut state prison spending $60 million.