Wilson Calls for Special Session to Cut Budget

Facing more bad news of falling tax revenues and rising expenditures, Gov. Pete Wilson on Tuesday targeted renters, state employees and the poor for a new round of budget cuts and urged the Democrat-controlled Legislature to convene a special legislative session to act on them before the end of the month.

“The people of California deserve immediate action, and when the Legislature does not act in a timely way it simply runs up the bill,” Wilson told reporters, outlining a plan that calls for $935 million in cuts and savings, including elimination of a special tax credit for renters, a 5% pay cut for rank-and-file state employees and another 4.5% rollback in financial aid for welfare families.

Democratic legislative leaders appeared cool to the idea of rushing back into session and even Wilson conceded the Legislature was not likely to buy into his proposals, since nearly all of them were rejected earlier this year.

Wilson’s proclamation Tuesday calling for a special session carried no particular date, effectively leaving it up to the Democratic leadership whether to heed his call. For weeks, some Democrats have been urging Wilson to call a special session to deal with the worsening budget problem. Wilson’s gesture had the effect of putting the burden back on Democratic leaders.

“Now they can’t blame us for not calling them back because we did,” said James Lee, a spokesman for Wilson.

The Legislature, now in recess, is scheduled to return to the Capitol Jan. 6 to meet in regular session.

Senate President Pro Tem David A. Roberti (D-Los Angeles) said he would consider the governor’s suggestion, but in a statement released by his office said that he was “not inclined” to return to the Capitol this month to eliminate the renters’ tax credit.

Noting that Wilson and the Legislature last summer eliminated the credit for wealthier renters, Roberti said, “It is illogical to take $400 million from renters, which otherwise is disposable income which helps the economy.”

Assembly Speaker Willie Brown had no immediate comment.

Shortly before Wilson issued his latest budget proposals, the nonpartisan Commission on State Finance gave its bleakest assessment yet of the financial problems facing the state. The commission said the state budget will be underfinanced by about $5 billion during the next two budget years. The commission’s worst-case scenario envisions a budget shortfall of $7 billion.

Wilson spoke with reporters during a chilly, campaign-style news conference convened on a parking lot of a small construction company in the Sacramento suburb of Rancho Cordova.

Covering a number of subjects, the governor unveiled his newest budget ideas and put in a pitch for the controversial welfare initiative he unveiled Monday in Glendale.

Wilson also sought to blunt some of the criticism directed at him for recent comments about the high cost of supporting immigrants. He praised the owner of the construction firm, Rafael Martin, who immigrated to California from Mexico when he was 15, as an example of a California “success story.”

Adding to the campaign flavor of the event, Wilson stood with Martin and a group of employees, who waited silently while the governor delivered a statement and then fielded questions from reporters.

The welfare initiative, which Wilson wants to put on the November, 1992, general election ballot, proposes a sweeping series of changes for the $6-billion Aid to Families With Dependent Children program, the largest of the state’s welfare programs. The initiative would roll back financial aid for some by nearly 25% and impose new sanctions on teen-age and unwed mothers. In addition, the initiative would give Wilson and future governors sweeping new powers over state spending during financial emergencies.

Democrats and advocates of the poor immediately jumped on the proposal, suggesting that the new powers would make Wilson “dictator of California.” Some critics said Wilson’s welfare proposals were similar to the radical politics espoused by David Duke, the Louisiana state legislator and former Ku Klux Klan leader who recently announced he was running for President.

Apparently trying to blunt the criticism, a Wilson aide distributed copies of a magazine article reporting that opponents of some officeholders were using Duke as a buzzword to discredit their policies.

Wilson said the initiative reflects “the harsh reality” of the current budget situation, which he contends has been brought on by soaring costs of providing public assistance to the needy and various policies, including high taxes, that he contends are forcing businesses and productive workers out of the state.

The Commission on State Finance adopted a budget analysis predicting a two-year shortfall of between $4.9 billion and $7.4 billion, depending on when the economic recovery begins.

“California is in difficult economic times and this translates into difficult fiscal times for the state,” said Kevin Scott, the commission’s executive director. “We do feel this is the most severe recession of the post-war era.”

Scott’s more optimistic forecast--based on the economy recovering in about mid-1992--projects a $4.9-billion shortfall for the current fiscal year and the year beginning July 1, 1992. That number includes a $3.6-billion shortfall this year and a $1.3-billion shortfall next year.

If the economy doesn’t turn around until early 1993, Scott said, the shortfall would climb to $7.4 billion--$4.3 billion this year and $3.1 billion next year.

The bulk of either shortfall would result from revenues failing to meet projections. State spending also is expected to exceed projections because of increased demand for health and social programs for the poor.

State Controller Gray Davis, a member of the finance commission, said he thought even Scott’s more pessimistic forecast was too rosy. He said a study by his office of past patterns in the state’s receipt of tax revenues shows that revenues alone will fall $6.1 billion short this fiscal year. Higher expenditures and any problem next year would be added on top of that.

“I don’t think anyone has grasped the enormity of the problem,” said Davis, a Democrat. “California is in trouble and we need an economic plan. We’re like a ship adrift. No captain. No plan. No direction.”

Last year, during the first week of December, then-Gov. George Deukmejian called a special session of the Legislature to deal with a deficit in the 1990-91 budget. At the time, Deukmejian also proposed eliminating the renters’ credit, along with a host of other proposed budget cuts that added up to about $1 billion. Lawmakers, who were in Sacramento to organize and elect leaders for the two-year legislative session, gave Deukmejian’s plan only cursory hearings.

Trimming Welfare

Gov. Pete Wilson is asking voters next year to approve a constitutional amendment to cut welfare benefits by 10% immediately and by 25% eventually for many recipients of Aid to Families With Dependent Children, the largest welfare program administered by the state. The reductions proposed by Wilson would follow an earlier cut made in September. Following are comparisons in terms of monthly checks for welfare recipients:

NUMBER BENEFIT CURRENT PROPOSED PROPOSED IN FAMILY BEFORE BENEFIT 10% CUT ADDITIONAL 9/91 15% cut 1 $341 $326 $293 $249 2 $560 $535 $482 $410 3 $694 $663 $597 $507 4 $824 $788 $709 $603 5 $940 $899 $809 $688 6 $1,057 $1,010 $909 $773

SOURCE: state Health and Welfare Agency

BACKGROUND

The Legislature can meet in a special session only upon the issuance of a proclamation by the governor. Special sessions have been called with regularity in recent years, usually to deal with disasters, such as the Loma Prieta earthquake, or, commonly, budget problems. Technically, the Legislature can call itself back into “regular” session any time it chooses. Special sessions are popular because they are convened for specific purposes, forcing lawmakers to focus on those problems. Bills passed in such sessions take effect immediately without the normal requirement of a two-thirds vote. A special session convened last year for earlier budget problems was not dissolved, so Gov. Pete Wilson’s proclamation Tuesday simply expanded the scope of the earlier session to include current budget problems. Wilson’s proclamation also expanded the list of possible legislative subjects to include bills dealing with the poinsettia white fly infestation and the Oakland fire.