Urban Aid Tax Plan Backed but Funding Is in Dispute : Cities: Democratic, GOP leaders see need for helping new businesses. Specific financing proposals lacking.

Democratic and Republican congressional leaders agreed Tuesday on the need for tax breaks to help new businesses in blighted urban neighborhoods but they and President Bush were unable to settle on how to pay for them.

Their failure to resolve crucial questions about financing suggested that considerable work remains to be done before the plan for expanded “enterprise zones” can be enacted, even though California officials pressed for quick action. The Senate Finance Committee plans hearings on the issue today.

“If you agree it’s a good thing, then do it. The time to move is now,” said California Gov. Pete Wilson after he, Los Angeles Mayor Tom Bradley and the head of Rebuild L.A., Peter V. Ueberroth, emerged from a White House meeting with Bush and congressional leaders.

Democrats, meanwhile, expressed frustration over the lack of a specific funding proposal by the Administration for a program that the White House estimated could cost $2.3 billion over five years.

“I think it’s critical that they tell us how they’re going to pay for it,” said Sen. Lloyd Bentsen (D-Tex.), chairman of the Senate Finance Committee and a participant in the meeting.

Ueberroth said that the Democrats posed “hard, tough questions about how (to) pay for these things” and others said that such questions elicited no specific answers from Bush.

Nonetheless, the meeting produced signs of a possible compromise that would speed congressional approval of an emergency assistance program for Los Angeles.

White House Press Secretary Marlin Fitzwater said that Bush expressed support for a summer jobs plan in a Senate bill, which the White House has opposed previously.

A House measure intended to address urban needs would cost $495 million and is limited primarily to loans and grants to businesses in riot-scarred Los Angeles and flood-damaged Chicago. The considerably broader version passed by the Senate adds $1.5 billion, including $700 million to pay for summer jobs and additional funds for Head Start programs and education measures, among others.

Briefing reporters on Tuesday’s meeting, Senate Majority Leader George J. Mitchell (D-Me.) said that congressional Democrats are ready “to move as quickly as possible” on Bush’s new enterprise zone proposal but are still receiving conflicting signals from the White House on the broader urban aid issue.

Mitchell complained that Bush gave the Democratic leadership no details of the new proposal other than to say that he now wants Congress to quickly pass legislation creating the enterprise zones, while leaving Democratic proposals for a more comprehensive urban aid package to future negotiations.

Mitchell indicated that the Democrats, fearing Bush will lose interest in their proposals for education and a summer jobs program once separate legislation creating the enterprise zones is passed, still favor passage of a broader urban aid package of which the enterprise zones would be but one part.

Mayor Bradley said he stressed during the meeting that he considers it imperative to stipulate in the enterprise zone bill that 25% of the new jobs go to people living within the affected community.

Regardless, he said, “speed is critical. We have got to demonstrate to the people of our cities that the government means business.”

The enterprise zone plan has emerged as a cornerstone in Washington’s efforts to speed assistance to Los Angeles in the wake of the riots. In an effort to make troubled inner-city neighborhoods more attractive to job-creating businesses, the plan would offer tax advantages to companies that establish operations there.

The Administration has begun talking about expanding the plan to include all distressed areas that meet the qualifications, rather than offering it only in certain cities or neighborhoods.

And, in an effort to make the idea more attractive to Democrats, the Administration is considering an earned income tax credit that would help offset Social Security and other taxes paid by newly employed workers in the zones.

Times staff writer Michael Ross contributed to this story.