Assembly Passes Budget but Delays Vote on Tax Hike : Finance: Nine Republicans join Democrats in sending spending plan to governor. But Wilson threatens to veto it unless Legislature approves revenue measures.

With a handful of Republicans rising to support their governor, the Assembly passed and sent a $56.4-billion budget to Gov. Pete Wilson on Thursday, but put off decisions on the tax increases necessary to finance it and wipe out a projected $14.3-billion deficit.

The action, seen as a breakthrough in the stalled budget negotiations, came after nine Republicans broke with their more conservative colleagues and allowed the budget to pass by a bare two-thirds majority.

Wilson applauded the action, but threatened to veto the budget unless the Democratic-controlled Legislature sends him the package of follow-up bills needed to make it work. These include a variety of tax hikes, chiefly a proposed 1 1/4-cent increase in the sales tax, along with politically troublesome proposals to transfer more than $1 billion in public employee pension funds to state and local governments and a historic rollback in welfare benefits for women and children.

But the Republican governor was not complaining. “Obviously, I am very pleased,” Wilson told reporters after the Assembly adjourned.

Faced with what some thought was a near-impossibility--getting Republicans to vote for a budget that requires $7.7 billion in tax increases--Wilson applauded the lawmakers for “a courageous vote” on the spending plan, which was approved by the Senate last Saturday.

The budget, containing record appropriations for programs ranging from public schools and community colleges to prisons and state hospitals, passed on a narrow and bitterly contested 54-23 vote. In addition to the nine Republicans, it was supported by all but one of the Assembly’s 45 Democrats. Although the Assembly’s vote was five days past the Legislature’s constitutional deadline to act on the budget, it has been four years since a budget was sent to the governor this early.

Wilson’s spending plan envisions 11% growth. If all the tax measures are approved, revenues would rise 20%. The higher revenue growth is needed to pay off a deficit in the current-year budget and rebuild financial reserves to $1.6 billion.

Those budget figures do not include $2.2 billion in current state spending on mental health, medical services and welfare programs that are being shifted from the state to the counties. The shift is part of a plan by Wilson and legislative leaders to realign programs and correct some of the structural problems that led to the monumental deficit.

Meanwhile in the Senate, a compromise $18.4-billion bill to finance schools at the level demanded by Proposition 98 was passed 36 to 0 with no debate and sent to Wilson for his expected signature.

In other budget action Thursday, the Assembly sent the governor two bills needed to bring about the state to county shift in programs. One bill, which would transfer mental health and medical services programs to counties and create a special state account to cover the costs of the realigned programs, passed 55 to 21. The other, shifting to counties social service programs for children, elderly shut-ins and welfare recipients, passed 54 to 21.

A third measure to help finance the shift by raising motor vehicle license fees $769 million during the next budget year failed to get the 54 votes required for passage. Wilson and his allies in the Assembly were confident about getting a two-thirds majority to pass the measure, which narrowly failed on a 50-24 vote.

Even if all tax increases are approved, the new levies will not be enough to head off massive service cuts, budget officials said. The new budget requires about a 9% reduction in the amounts that state analysts say is needed to keep up with program growth and inflation. Wilson Administration officials predict that the 9% cut will require the layoffs of thousands of state employees.

Fee increases of 40% are expected for students enrolled in the University of California and 20% for those in the Cal State University system. There is no new money in the budget for what are called “cost-of-living” increases, or increases linked to the rate of inflation.

Basic welfare grants for the Aid to Families with Dependent Children program would, under separate legislation, be reduced 4.4%, with increases frozen for at least three years.

Despite the cuts, Wilson did win legislative support for several budget initiatives that he proposed for the Office of Family Planning and early education programs for children.

The budget would provide full funding for public schools and community colleges established in formulas approved in Proposition 98, plus an additional $380 million to cover increased costs. State prison spending would be boosted by 9% to pay the extra costs of the estimated 10,000 to 11,000 new prisoners entering the system.

Given the tax increases and spending cuts required by the budget, Wilson had a difficult time rounding up votes. Last year, a much smaller fiscal problem kept the budget from being enacted until July 31, more than four weeks past the start of the fiscal year.

The turning point in Thursday’s vote came when nine Republican members broke with the Assembly’s staunch anti-tax conservatives and joined Democrats to give Wilson the 54 votes he needed to get the budget passed in time for the 1991-92 fiscal year, 10 days away.

The GOP lawmakers made it clear that the reason they were voting for the budget was loyalty to--and pressure from--Wilson, who in January inherited a budget crisis from former Gov. George Deukmejian that has grown to historic proportions. The projected $14.3-billion deficit, caused by the recession and soaring costs of prisons, education, welfare and other programs, is the largest ever faced by a state.

Assemblyman Paul Horcher (R-Hacienda Heights), a freshman legislator who cast the 54th and deciding vote, said: “(Wilson) told me, ‘I need your vote. Please do the right thing.’ ”

Wilson, a former U. S. senator and mayor of San Diego, was able to call on hometown as well as party loyalties.

Assemblywoman Carol Bentley (R-El Cajon), who resigned her position as GOP caucus floor whip in the tense moments before casting the 53rd vote, said: “I certainly didn’t want to be pictured as the obstructionist from San Diego County that was going against the governor . . . the lone legislator from San Diego County not supporting him on the floor.”

The 52nd vote was made by another member of the GOP leadership, caucus Chairman Bev Hansen of Santa Rosa, who also offered her resignation from the caucus. Hansen said that Wilson called her during the budget debate and said, “this budget needs to move forward,” and she agreed.

One GOP holdout, Assemblyman Gil Ferguson of Newport Beach, said Wilson’s hometown pull was crucial in peeling off three San Diego Republicans for the budget vote.

“The San Diego delegation of wimps passed this budget,” said Ferguson, one of the conservatives known in the Assembly as the “cavemen.” He was referring to Bentley and two other GOP lawmakers, Tricia Hunter of Bonita and Robert C. Frazee of Carlsbad.

The nickname given to Ferguson and other conservatives stems from their ardent anti-tax attitudes and bullying approach to critics. Many were elected as an outgrowth of the 1978 tax revolt that produced Proposition 13, the landmark property tax reduction measure. Others, like Ferguson, were elected later but comfortably adopted the hard-line approach.

The vote Thursday marked the first time in recent years that moderate GOP lawmakers in the Assembly broke ranks with the conservatives and joined Democrats to pass a budget.

Assembly Republican Leader Ross Johnson of La Habra, a conservative, voted against the spending plan. There later was speculation that his leadership position, already weakened by an abortive attempt to unseat him last month, could be impossible to retain.

Johnson rejected such speculation. “Sure I’m disappointed, but I don’t regard (the vote) as some sort of personal defeat for Ross Johnson, as if this were a game of Monopoly or something . . . . I did what I believe my constituents in north Orange County wanted me to do. I stood up for the taxpayers of California and I don’t have anything to be ashamed of,” Johnson told reporters.

During the floor debate, Republican opponents of the budget said the spending cuts did not go deep enough and predicted that another deficit would develop next year.

However, Assemblyman John Burton (D-San Francisco) contended that the Republicans were really not after structural budget reform, but wanted deeper cuts in welfare programs--what he called “structural cruelty” to the elderly, blind and disabled.

Assembly Speaker Willie Brown (D-San Francisco), recalling his impoverished childhood in an emotional speech, declared: “This nation always has given opportunity to the poor.”

Besides Hansen, Horcher, Bentley, Hunter and Frazee, these Assembly Republicans joined 45 Democrats in voting for the budget: Gerald N. Felando of San Pedro, William J. Filante of Greenbrae, Bill Jones of Fresno and David G. Kelley of Hemet. The Democrat who voted against the budget was Tom Umberg of Garden Grove.

Times staff writers Carl Ingram, Ralph Frammolino and Daniel M. Weintraub contributed to this story.