Assembly Democrats Offer Plan to Cut Deficit : Finances: It calls for $34 million in budget reductions and $503 million in transfers and new revenue. It falls short of meeting Wilson’s proposal.

Assembly Democrats on Tuesday proposed shaving $537 million from the state’s projected $2-billion deficit in the current fiscal year through a variety of measures that fall short of meeting a proposal by the Wilson Administration.

The Democratic plan, released by the Assembly Ways and Means Committee, calls for $34 million in budget cuts and $503 million in budget transfers and new revenues.

The plan, which Assembly Speaker Willie Brown (D-San Francisco) has said could be adopted as soon as next week, is the Legislature’s first specific response to Gov. Pete Wilson’s plans for erasing shortfalls in the current fiscal year and in the year beginning July 1.

The proposal includes only $2 million of the $87 million that Wilson has suggested saving by reducing welfare grants.

The Democrats would save the $2 million by accepting Wilson’s proposal to pay new residents welfare grants no higher than what they could have received in the state from which they moved. Wilson also wanted to save $81 million by reducing welfare grants 10% across the board and $4 million by eliminating welfare grants to poor women pregnant with their first child.

The Assembly Democrats also rejected Wilson’s proposal to save $72 million by reducing state employees’ pay by 5%.

As an alternative, the Democratic plan proposes a $32-million savings produced through voluntary furloughs. To save that amount, half of all state employees would have to take one day off per month for the final four months of the fiscal year.

The proposal accepts only about half of Wilson’s plan to shift $60 million in cigarette tax receipts to new purposes, rejecting the governor’s suggestion to suspend a popular anti-smoking advertising and education campaign. Also rejected was Wilson’s proposal to save $8 million by eliminating dental care for poor adults and a variety of other Medi-Cal services.

In all, the Democratic plan falls $169 million short of the $706 million that Wilson in January proposed be shaved from this year’s spending plan. If the same policies were carried over into the next fiscal year, which begins July 1, the Democratic plan would be about $1 billion short of meeting Wilson’s targets for savings, an Administration official said.

The Democrats agreed with Wilson’s proposal to use a $120-million court settlement to help reduce the deficit and to take $6 million from a loan guarantee fund run by the state’s World Trade Commission. Both plans also assume that the state will get $195 million from the federal government to help offset the cost of providing medical care to newly legalized immigrants.

A Wilson Administration spokeswoman said the Democratic plan was a start but insufficient. “It doesn’t get us there,” said Cynthia Katz, assistant director of the Department of Finance.