Governor Cuts, Signs the Budget : Spending: Deukmejian, austere to the end, vetoes $753 million from the plan. Action ends state’s longest fiscal deadlock.

Austere to the end, Gov. George Deukmejian on Tuesday signed a $55.7-billion budget--his last as governor--after vetoing $753 million from the spending plan sent to him last weekend by the Legislature.

Deukmejian said the budget for the 1990-91 fiscal year will nevertheless boost spending for most state operations by 7.6%. He brushed aside the disruptions caused by his prolonged battle with the Democrat-controlled Legislature, saying that “California’s fiscal health is in triple-A mint condition.”

The Republican governor argued that his vetoes “are only slowing down the automatic programmed increases in spending.”

“As I sign this budget, let me say that I know the big spenders won’t be satisfied. They never are,” he said in an address prepared for a live television broadcast.

Deukmejian did not immediately disclose details of where in the budget his specific cuts were made.

The budget signing, coming 31 days into the new fiscal year, was the last official act necessary to end the state’s longest budget deadlock.

It cleared the way for the state to resume payments to employees and others who have not been paid since July 1 and was just in time to meet a big state payroll due today to about 200,000 state employees.

Even before the vetoes were made, California’s 58 counties, medical services and mental health programs took some of the biggest cuts in the budget signed by Deukmejian.

With Proposition 98, the 1988 initiative, giving public schools and community colleges a lock on 41% of the available tax dollars, Deukmejian had complained that he was forced to take disproportionately larger cuts from other services.

Next to public education, health and welfare services made up the largest block of the budget, taking about 31% of the pie, so they were the biggest targets.

The governor’s vetoes came on top of spending reductions already contained in the budget approved Saturday by the Legislature or in separate bills passed with the spending plan last weekend.

Deukmejian and the Legislature spent eight weeks in intense negotiations before they reached agreement, part of which was that Deukmejian would cut at least another $419 million through vetoes.

The cuts were made necessary by a $3.6-billion gap between the tax revenues that will be generated this year and the cost of meeting the state’s legal spending requirements, providing enough money to take care of such things as soaring welfare rolls and prison inmate populations and rebuilding the state’s reserve to $1.3 billion--a top Deukmejian priority.

Even though the general fund will increase by 7.6%, state officials said deep reductions in spending are needed because of such things as rising school enrollments (more than 200,000 new students are expected this fall), prison populations that have been growing at an average of 14% annually in recent years, the high costs of providing Medi-Cal services, and a welfare population that is growing three times faster than the state’s overall population.

Larger cuts approved earlier by the Legislature include elimination of 4.6% increases in benefits to welfare recipients and special income supplements to aged, blind and disabled people, which saved the state $260 million. The freeze means that a welfare family of three will not receive an anticipated $32 cost-of-living adjustment.

Cities, counties and special districts will lose $459 million because of the budget agreement. Counties alone will lose about $395 million in state support to various programs.

In the $55-billion budget approved by the Legislature Saturday, state support for trial courts was reduced 10% below last year’s funding level, with a total reduction of $60 million.

Financial aid from the state to counties for medical services for the working poor was cut $175 million.

Another $385-million reduction came from across-the-board cuts to state departments. The fund to run the Legislature, up 17% in two years, was reduced 2% to $188 million. The budget also imposes a 2% reduction in spending related directly to operation of the governor’s office, the Legislature and the judiciary. A 1% cut was imposed on agencies and operations with 24-hour service requirements, such as hospitals. Scheduled operating increases for the University of California and the California State University system will be cut 4%, and other state operations, 5%. That will allow some of the programs to grow despite the reductions.

A big chunk of money, $987 million, will come from delaying the implementation of programs and shifting funds from various accounts. About $700 million of that total will come from reduced contributions to retirement funds for public employees, teachers and the University of California.

Among the big losers are the state’s program to train people for jobs to get them off welfare, known as Greater Avenues for Independence, whose proposed budget of $364 million will be dropped by $101 million.

Deukmejian claims that much of the budget problem is caused by laws, federal entitlements and built-in growth that is causing spending to go up faster than tax revenues. Given what he calls a built-in “structural” problem in the budget, Deukmejian insisted on cuts that will not only get the state through the current year, but also provide for some lasting controls.

One long-term control came out of agreement on legislation that will allow the director of the state Department of Finance to suspend a number of spending requirements in years when revenues are projected to fall below expenditures and to impose cuts of up to 4%.

In another development, Assemblyman Lloyd G. Connelly (D-Sacramento) said Tuesday that he is working to rescind a budget action he said will repeal a portion of the state’s open-meeting law.

The action on open meetings came in a bill designed to save the state $59.3 million by eliminating requirements that force local governments to provide certain services. One of the services required by the state, for which the state reimburses local governments, is that legislative bodies of local agencies, such as city councils, post agendas at least 72 hours before each meeting.