‘Crisis’ Budget for Calif. : Gov. Proposes Tax Hikes, Cuts in Spending

Gov. Pete Wilson proposed a $55.7-billion state budget today that raises vehicle license fees and taxes on liquor, snack foods, newspapers and periodicals and trims school and welfare spending.

The spending plan closes an estimated $7.1-billion deficit with $1.7 billion in new taxes and fees and $5.3 billion in cuts or transfers of existing programs.

“There is a crisis. We are obligated to solve it. We can. We will,” Wilson told reporters in a mid-morning budget briefing

“We overcome the $7-billion gap by a mix of expenditure cuts, freezing of cost-of-living increases, the realignment of state and local program responsibilities, reducing state operations spending, the suspension of Proposition 98, moving toward a ceiling on Medi-Cal and new revenues,” he added.

The spending cuts spread across the board, with schools and welfare spending hit hardest and all cost-of-living increases suspended for the coming year, including those which increase automatically under current state laws.

The only significant spending increases are for $170 million in new preventive health, education and anti-drug programs aimed at children, which the new Republican governor unveiled in his Monday inaugural address and detailed in his State of the State address Wednesday night.

Battered by sharp declines in anticipated state tax revenues due to the spreading national recession, Wilson’s budget anticipates only a 2.3% increase, from $54.4 billion to $55.7 billion, in state revenues between the already depressed funds in the current year and the 1991-92 fiscal year that begins July 1.

Combined with an additional $22.3 billion in federal funds that are either spend directly by the state or channeled through the state to local governments, Wilson’s total budget proposal tops $78 billion.

Higher vehicle license fees account for the biggest single part of the new revenues, at $781 million, or an average of about $35 for each of the more than 20 million vehicles on California roads.

Wilson’s plan also includes a $190-million increase in state taxes on alcoholic beverages and extends the state sales tax to candy, snack foods, newspapers and periodicals to raise another $384 million.

University of California, state university and community college fees would all be increased 20%.

Local school reductions would be imposed by automatic cuts in the share of state education money guaranteed by Prop. 98. The cuts are required whenever state revenues fall below a specified level.