Assembly Democrats Threaten to Kill EPA Plan : Budget: They raise the issue as a gambit against governor’s insistence on linking workers’ compensation reform to passage of spending plan.

In the political maneuvering over the state budget, Assembly Democrats Friday were threatening to scuttle Gov. Pete Wilson’s proposal to create a California Environmental Protection Agency, legislative sources said.

Upset that Wilson has linked reform of the state’s workers’ compensation system to approval of tax increases and passage of the state budget, these Democrats are saying they can play the same game if the other issues are not settled to their liking.

“We’re saying we’ll tie Cal/EPA to the budget if (Wilson) wants to tie workers’ compensation to the budget,” said one influential Democrat, who agreed to discuss the issue if he were not identified.

The governor’s deputy press secretary, James Lee, said Wilson reacted to reports of Cal/EPA becoming an issue in the budget battle with a grin. “He finds it ironic that the Democrats or the Speaker (Willie Brown) would engage in political terrorism of their own kind and hold environmental protection hostage,” Lee said. The remark referred to the San Francisco Democrat’s statement earlier in the week calling the Republican governor “a political terrorist” for insisting on changes to the workers’ compensation system as part of a final budget agreement.

The debate over Cal/EPA is an example of how, under the pressure of passing a budget after the July 1 constitutional deadline, other issues suddenly and unexpectedly can take on heightened importance. Some call it leverage. Others term it blackmail. But everyone agrees it is part and parcel of politics in the Capitol.

Establishment of Cal/EPA--an attempt to streamline the state’s environmental bureaucracy--is high up on Wilson’s political agenda. It was a a centerpiece in his gubernatorial campaign last year, and his claim to be an environmental governor may rest on its success.

Although the fate of the new agency has not been formally placed on the table in budget negotiations, a coalition of three rural Democrats and 15 conservative Republicans introduced a resolution in the Assembly late Thursday to kill the proposed environmental agency.

Wilson’s proposal to form the agency can be vetoed by a majority vote in either the Assembly or Senate. But if neither house acts by midnight Tuesday, the agency automatically starts up the next day.

The timing, in this case, presents a particular opportunity for Wilson’s Democratic opponents. The Tuesday night bewitching hour for formation of the agency happens to coincide with the deadline for passage of the current version of the budget bill.

As a result, Brown and his fellow Democrats could use Cal/EPA as a bargaining chip in budget negotiations.

Brown’s press secretary, Michael Reese, acknowledged that tying the fate of Cal/EPA to the negotiations on workers’ compensation and the budget was the subject of “feverish talk in every corner of this building.”

However, after meeting with Wilson on Wednesday, Brown would only say that Cal/EPA was a subject of discussion. A number of legislative sources, however, were saying that the creation of the new agency had become mixed up with the budget.

To ensure support for the proposal, Wilson met separately this week with the chairman of the Assembly Natural Resources Committee, Byron D. Sher (D-Palo Alto) as well as with Brown. Wilson has phoned other Assembly members and sent out letters to all members of the Legislature.

For a variety of reasons, Wilson’s proposal has been controversial. It’s unpopular with rural legislators because it pulls the regulation of pesticides out of what farming interests see as a sympathetic home in the Department of Food and Agriculture. But Sher and a number of environmental groups have criticized the plan because it would not separate the scientists who assess the dangers of pesticides from the bureaucrats who make the rules for their use.

Although Sher is critical of the governor’s environmental proposal and has a bill of his own to modify it, he said he is uncertain whether he would vote to kill it. He pointed out that the Democratic majority in the Assembly has not yet taken a formal position on the governor’s Cal/EPA proposal.

“The issue is lingering there in the wings and I think it could have some impact on the budget matter,” Sher said. “Anything that people have a high interest in can get mixed up in this.”