Senate Leaders, Governor Reach Accord on Budget : Spending: Package of higher taxes and welfare cutbacks is to be introduced today. Even if it passes, it faces an uncertain future in the Assembly.

Gov. Pete Wilson and state Senate leaders have agreed in principle to a budget-balancing package that would raise sales, alcohol and vehicle taxes and cut welfare payments to poor women and children, the Senate’s Democratic and Republican leaders said Friday.

The deal disclosed Friday calls for a 4.4% reduction in welfare grants and a five-year freeze on cost-of-living raises for state welfare programs. It includes a 1.25-cent increase in the sales tax and several proposals for what the governor has called “structural reform” in state government.

The agreement was roughed out in a five-hour meeting late Thursday between Wilson, Senate President Pro Tem David A. Roberti (D-Los Angeles) and Senate Republican Leader Ken Maddy of Fresno. But even if it passes the Senate, it will face uncertain prospects in the more deeply divided Assembly.

A Wilson aide confirmed that the governor had agreed in principle to the deal.

“We think we have a budget agreement,” said Bill Livingstone, Wilson’s press secretary.

Roberti and Maddy said they intend to shepherd the package through the Senate today, the constitutional deadline for the Legislature to erase a projected $14.3-billion shortfall and pass a budget for the fiscal year beginning July 1. Parts of the agreement are to be amended into a $55-billion-plus budget bill passed by a two-house conference committee Friday.

In the Assembly, Republicans have vowed to reject any plan that does not contain extensive, permanent reductions in state spending. Democratic Assembly Speaker Willie Brown of San Francisco and Assembly Republican Leader Ross Johnson of La Habra were not part of the Thursday night negotiations that led to the deal.

Brown told reporters that he could probably support the package but that he would reserve judgment until he has seen all the details. In any case, he predicted that the biggest obstacle to winning passage of any compromise will be the Assembly Republicans. Brown suggested that Wilson will have to lobby hard among his fellow Republicans to win passage of the budget.

“I’m far more interested, not so much in what I could go for, as in what Republican members of my house could go for,” Brown said. “That’s where the problem is. The vote problem has never been Democrats in this house and it has not been anybody in the Senate.”

Johnson, the Republican leader, said the agreement did not sound like one his caucus would support. The votes of at least eight Republicans will be needed among the 54 Assembly votes required to pass the budget.

“I want to see, and our members want to see, long-term cuts that produce permanent savings for the taxpayers,” Johnson said in an interview. “One-time cuts, delays, that doesn’t do it. And taxes don’t do it. You can’t tax your way out of this problem.”

Johnson said he did not think passage of a budget was imminent. But he added: “If there are appropriate trade-offs, then it might be something we would want to look at.”

Roberti said he disagrees with many elements in the plan. But he said he had no choice but to quit negotiating and strike a deal with Wilson and Maddy.

“Our first duty is to pass the budget,” Roberti told reporters Friday after briefing Senate Democrats. “We can’t all get our way. You have to have cuts and you have to have taxes.”

Roberti said he had abandoned any hope of raising income taxes on the wealthy--the Democrats’ preferred way of raising part of what is needed to close the budget gap.

“The governor is not budging on that,” Roberti said.

The deal disclosed Friday would be the biggest and final piece in a complex puzzle that also includes an education finance package and a shift of health and welfare programs to the counties.

Maddy said the plan would raise about $7 billion in new taxes, starting with the taxes Wilson has already proposed. They include:

* The 1.25-cent sales tax increase, which would raise about $3.6 billion next year. Broadening the sales tax to include newspapers, candy, snacks, bottled water, leased equipment, jet and ship fuel would raise another $605 million.

* A 6% tax on telecommunication bills, including telephones and cable television, to raise $630 million.

* Higher taxes on wine, beer and hard liquor to raise $200 million.

* Increased annual vehicle license fees for all cars, totaling $769 million.

* Changes in the state tax code to conform with federal law and a requirement that taxes be withheld from independent contractors, to raise $623 million.

Maddy said the deal also includes a two-year suspension of businesses’ right to carry over operating losses from one tax year to the next. This would raise $300 million next year. A related provision could trigger an increase in bank and corporation taxes in the 1993-94 fiscal year.

Another new tax wrinkle would be a $70,000 cap on the amount of home mortgage interest that individuals could deduct from their taxes. This would raise $50 million.

On the other side of the ledger, the deal would include at least $5 billion in program cuts.

The reduction in grants to poor women and children under the Aid to Families With Dependent Children has been the most controversial of the cuts. Under the agreement, grants to a woman with two children would be cut by 4.4%, or about $30 a month. A law granting automatic cost-of-living increases to welfare recipients and the aged poor and disabled would be suspended for five years.

Brown, long a defender of welfare programs, said he would vote for the proposal in a “hot minute” if it meant closing the budget deal. Republican Assemblywoman Tricia Hunter of Bonita described the welfare proposal as “in the ballpark” of what her colleagues would accept.

The deal also includes a provision that could result in reinstatement of the welfare cost-of-living increases. It involves stepped-up enforcement of child support agreements in divorces. Some of the money collected from delinquent parents--mostly fathers--would be put in a state trust fund and used to pay for the cost-of-living increases.

Maddy and Roberti said they also have agreed to changes in the state retirement system sought by Wilson that will require all new employees to enroll in a scaled-back pension plan. It also allows the state to take several hundred million dollars from two funds designed to supplement the pensions of retirees whose benefits are not keeping up with the cost of living.

Another part of the budget agreement would allow the governor to declare a “fiscal emergency” and prevent local governments and schools from granting salary increases--a measure sure to attract opposition from public employee labor groups.

Maddy said: “What makes many of us unhappy, and makes state employees unhappy, is we freeze salaries up here, we make cuts up here, and a local school district goes out and bargains for 6% across-the-board when we are sitting here trying to balance our budget.”

In addition to the tax increases and budget cuts, the plan includes bookkeeping changes and transfers to help close the $14.3-billion gap.

Times staff writers Carl Ingram, Richard C. Paddock and George Skelton contributed to this story.

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