New $4-Billion State Budget Cut Seen : Finances: The governor and GOP legislators have virtually ruled out a proposal to spread shortfall over two years. They want it solved in the next fiscal year.

Gov. Pete Wilson and Republican leaders in the Legislature have all but ruled out a two-year solution to the state’s budget shortfall, insisting instead that the entire problem be solved in the fiscal year that begins July 1.

As a result, Wilson and the Legislature will have to cut an additional $4 billion from the $60.2-billion budget that the governor proposed in January, unless they agree to increase taxes--an option that the Republicans also have rejected.

The new cuts would come on top of Wilson’s proposed 25% reduction in welfare grants, cuts in dental and medical care for the poor, a 5% pay reduction for state workers and elimination of the renters tax credit.

“What we’re going to have to do this year is going to involve a number of painful cuts, painful for everybody,” Wilson told reporters after a two-hour meeting Wednesday with Democratic and Republican legislative leaders.

A number of Democrats, including Assembly Speaker Willie Brown of San Francisco, have suggested spreading the shortfall over two years instead of one. That approach would allow the state to avoid some budget cuts by taking advantage of rising revenues in the second half of the 24-month period, when the economy is expected to have rebounded. It would involve borrowing money to cover a part of the deficit expected at the end of the current fiscal year.

“If in fact the projected growth in the economy and improvement in the economy is what they say it is and some of the things we incur are more than one year anyway, it may be that we ought to think two-year budgeting cycle rather than one,” Brown said as he went into the meeting with Wilson.

But afterward, Wilson said he did not think Brown’s idea was a good one because he believes that the state Constitution requires the Legislature to adopt a balanced budget every year and prohibits the state from incurring debt of greater than $300,000 without a vote of the people.

“That point is not new,” Wilson said. “It has been raised in the past. There are a number of legal and constitutional opinions that hold it is not constitutional.”

Others, including the Legislature’s lawyer and state Treasurer Kathleen Brown, dispute Wilson’s analysis. But Senate Republican leader Ken Maddy of Fresno said he probably would oppose the two-year approach even if it is found to be legal.

“The issue is going to be joined,” Maddy said. “We are going to have to come to the conclusion that severe cuts are going to be made.”

Those cuts could include a reduction of as much as $1.5 billion in the $18.4-billion budget that Wilson proposed in January for kindergarten through community colleges. A cut of that size would leave schools with less to spend next year than they had this year despite an expected 200,000-student increase in enrollment.

But even if that cut is made, an additional $5.4 billion would have to be taken from other programs, an amount equivalent to a 22% across-the-board cut in all programs outside of the public schools, community colleges, and other items protected by the Constitution, according to the Department of Finance. (If the Legislature adopts the cuts already proposed by Wilson, an additional 13% across-the-board reduction would still be needed to balance the budget for the next fiscal year.)

Among the programs vulnerable to that cut would be prisons, universities, health and welfare, parks and the general government bureaucracy.

The distribution of the cuts will be decided by Wilson and the legislative leaders, who hope to agree by June 15 on a plan that can win the approval of two-thirds of the members of both houses of the Legislature.

That date is the deadline in the Constitution for legislative passage of the budget. Wilson said passage by June 15 also would eliminate the need for the state to issue registered warrants, or IOUs, to pay its bills at the end of the current fiscal year on June 30 or the beginning of the next one on July 1.