Earthquake Tax OKd in Hectic Final Session : Legislature: Oil spill cleanup fund approved. March primary, new malathion spraying rules defeated.

Lawmakers racing to wind up a two-year session of the California Legislature passed a bill Friday that would place a new tax on homeowners to create a statewide earthquake insurance fund.

Wrestling with scores of unresolved issues, the Legislature also overwhelmingly approved legislation that would levy a $100 million tax on oil companies to pay for the cleanup of potential oil spills along the coast of California.

Two bills aimed at moving California’s presidential primary to March and changing the rules for malathion spraying in urban areas went down to defeat. But still hanging in the balance were proposals to put $3.3 billion in bond measures on the Nov. 6 ballot.

These measures were among hundreds of bills on a vast array of subjects facing legislators before they closed out their 1989-90 session. Despite their midnight deadline, both houses of the Legislature were expected to meet into the early morning hours today.

At times, tempers flared and shouting erupted as lawmakers--already weary from a week of lengthy floor sessions--pushed their legislation or fought to save their bills from last-minute defeat. At one point, two legislators on the verge of a fistfight over a pornography bill were pulled apart in a Capitol corridor.

Further illustrating the tense atmosphere in the Capitol, rumors swept through both houses that undercover FBI agents were mingling with lobbyists outside the chambers as part of an ongoing investigation of political corruption. A spokesman for the FBI, however, said no agents were deployed Friday in the Legislature.

Despite the crush of paper, the Assembly found time to take a swipe at Atty. Gen. John K. Van de Kamp, stripping all of the operating funds from Proposition 129, the anti-crime measure he sponsored for the November ballot. Legislators of both parties have been angry with Van de Kamp since he proposed limiting them to 12 years in office.

The earthquake insurance tax plan by Sen. Frank Hill (R-Whittier) is designed to provide home owners with basic quake coverage to supplement private insurance they might buy.

Homeowners would be required to pay from $12 to $60 a year into a quake fund that would collect $250 million a year. The coverage for homes damaged in an earthquake would begin at $15,000 for the first year and climb to $27,000 after five years if the fund accumulates enough money.

Most private earthquake insurance policies now available include a deductible equal to 10% of the value of the house. This bill is designed to cover that amount for most homes.

“We have a voluntary system now that doesn’t work,” Hill said, referring to the private insurance market. “I think this is proof that the legislative process can work and we can solve problems that need state government help.”

The measure passed the Assembly by a 43-21 vote and, within hours, cleared the Senate 28 to 3. Gov. George Deukmejian, who sponsored the bill, is expected to sign it.

Supporters of the legislation said that if the system had been in effect at the time of the Bay Area quake last October, 24,000 of the 25,000 homes damaged would have been fully covered by the program. The remaining 1,000 would have received the maximum amount but still would have needed private insurance to help pay the cost of rebuilding.

The program was opposed in both the Senate and Assembly by some Republican legislators who objected to imposing a mandatory charge on homeowners who live outside areas prone to earthquakes.

“It bothers me a little bit to take away the freedom of choice of the people of California whether they want to take a risk or not,” argued Sen. Don Rogers (R-Bakersfield).

In an attempt to raise money to pay for the potential catastrophe of an oil spill, the Assembly voted 70 to 1 and the Senate voted 31 to 1 to approve a compromise worked out between environmentalists and industry lobbyists. Deukmejian, whose office also was involved in the negotiations, is expected to sign the measure.

The legislation by Sen. Barry Keene (D-Benicia) would collect $100 million from oil companies by placing an additional tax of 25 cents on each barrel of oil. In the event of a massive spill, the state would be given unlimited authority to borrow additional money for cleanup operations that would be repaid by oil companies.

In an attempt to help prevent another spill off the California coast, oil tankers and terminals would be required to adopt comprehensive oil spill safety and prevention plans. Tankers would be subject to state inspection and would require tugboat escorts in hazardous waters.

In addition, the legislation would vastly expand the network of emergency crews and equipment available to swiftly control damage to birds, wildlife and the coast itself in the event of a spill.

“This is the most significant coastal protection bill the Legislature has considered in decades,” said environmental lobbyist Corey Brown of the Planning and Conservation League.

Lobbyist Michael B. Kahl, representing the Western States Petroleum Assn., gingerly endorsed the compromise, telling reporters that “generally the oil industry is pleased” with the agreement.

In the negotiations, the oil industry succeeded in including a provision that would grant at least 60 days of immunity for accidental property damage caused by oil company cleanup crews.

But not all efforts to resolve major issues before the midnight deadline met with success.

A plan to give California more political clout by moving the state’s presidential primary from June to March disintegrated after legislators could not agree on whether initiatives should be placed on the same ballot. Supporters of the proposal said they would try again next year.

Legislation that would have required state officials to conduct a health risk assessment before spraying malathion or other pesticides to eradicate insects was defeated in the Senate after Los Angeles legislators protested that it did not go far enough in protecting residents.

The compromise bill by Sen. Rose Ann Vuich (D-Dinuba) would have placed new requirements on the state for environmental review of pesticide programs where the governor has not declared an emergency.

Many growers supported the measure and even some environmentalists argued that it was better than nothing. But Senate President Pro Tem David A. Roberti, whose Los Angeles district has been the subject of frequent malathion spraying to eradicate the Mediterranean fruit fly, bottled up the bill on procedural grounds.

Assemblyman Burt Margolin (D-Los Angeles), sponsor of what was to be the first step toward a universal health insurance program, abandoned his efforts when Deukmejian sent word he would veto the bill. Margolin had crafted the measure as a fall-back plan after it became clear the Legislature would not pass a more ambitious bill requiring all California employers to pay a health care tax or provide coverage for their workers.

Negotiations on public school funding collapsed late Friday, leaving the state’s 1,100 school districts in a quandary over how much money to spend next year.

Deukmejian has insisted that the schools’ cost-of-living increase be limited to the 3% he approved in the budget he signed July 31. But school officials want the 4.76% hike passed by the Legislature. The difference between the two is about $355 million.

Educators, legislators and representatives of the governor’s office met throughout the day in an effort to reach a compromise. But finally State Superintendent of Public Instruction Bill Honig declared: “It’s all over. The deal finally fell through.”

This means local school districts must now decide whether to spend all of the 4.76% cost-of-living increase included in checks Controller Gray Davis is sending to the districts or to limit their spending to the 3% in the governor’s budget.

“Coming in the 12th hour of the Legislature, this really leaves us in a bind,” said Superintendent Gene Tucker of the Santa Monica-Malibu Unified School District.

On another education matter, the Senate voted 32 to 0 to pass a bill that would offer grants to school districts that adopt year-round schedules. The bill provides $27 million, more than half of which would go to Los Angeles schools.

The move to cut $561 million from Proposition 129, the Van de Kamp anti-crime measure, stems in part from the same budget battle that has frustrated school leaders. Van de Kamp’s measure would have spent the money on local law enforcement and drug-treatment centers.

But in an attempt to make up for an expected $3.6-billion shortfall, the Legislature and the governor in July diverted the funds earmarked by the Van de Kamp measure to a variety of other programs. The Assembly went a step further Friday to preempt the Van de Kamp initiative and said none of the $561 million could be spent even if it is approved by voters.

Demonstrating the resentment that many legislators harbor toward Van de Kamp--an unsuccessful candidate for the Democratic gubernatorial nomination--the bill zipped through the Assembly on a vote of 60 to 1.

In a bid to help rescue Butte County from bankruptcy, both houses passed and sent to the governor a bill waiving requirements that counties match state funds for certain programs.

The Butte County Board of Supervisors voted Friday to declare bankruptcy next week if it did not receive some sort of bailout from the state.

As the crush of bills moved through the Legislature, one modest measure produced an unusual alliance.

To the surprise of his colleagues, conservative Sen. John Doolittle (R-Rocklin) served as the floor manager in the Senate for a bill by onetime radical Assemblyman Tom Hayden (D-Santa Monica).

An embarrassed Doolittle explained, “When he has a good idea, I support him, which isn’t that often.” The bill, which would allow for easier disposal of medical wastes, passed the Senate on a 33-0 vote.

Earlier in the day, Assemblymen Gil Ferguson (R-Newport Beach) and Steve Peace (D-Chula Vista) nearly came to blows in a Capitol hallway. The two shouted insults at each other before they were separated by another assemblyman and a staff member.

Their argument stemmed from letters Ferguson had written attacking Peace and other opponents of a bill aimed at removing pornography from news racks.

“He was very, very angry,” Ferguson said later. “He kept screaming and he got so mad at one point that he threw his glasses on the floor.”

Times staff writers Daniel M. Weintraub, William Trombley, Douglas P. Shuit, Paul Jacobs, Carl Ingram, Jerry Gillam, Virginia Ellis and George Skelton contributed to this story.