Wilson Warns of Budget Disaster : Spending: Governor says proposal advocated by Democrats would mire state in debt. They charge that the cuts he is seeking are deeper than necessary.

Seeking to rally public support for deep cuts in state spending, Gov. Pete Wilson went on statewide television Thursday to warn that the Democrats who control the Legislature are prescribing a “double disaster” for California.

Wilson said Democratic proposals to raise taxes and stretch repayment of the state deficit over two years would be “big mistakes” that would commit the state to “ruinous deficit spending” for years to come.

“So I want to make clear tonight for them and for all who hear me: We can’t let them do that to California,” Wilson said. “And I’m not going to let them do that to you.”

Wilson spoke from his Capitol office five days before the start of the new fiscal year, when, if a new budget is not in place, the state will run out of cash and begin to issue registered warrants, or IOUs, to pay its bills.

Wilson’s hard line angered Democrats, who chastised him for making partisan speeches rather than working to find common ground with legislators to save the state from fiscal chaos.

“The governor is supposed to lead, find solutions, compromise, not pontificate,” said Democratic Assemblyman John Vasconcellos of Santa Clara, chairman of the Assembly Ways and Means Committee. “He’s really abdicated the role of governor. That’s the saddest thing--he’s not acted in a way that is bringing about any effort to solve this.”

As members of his Cabinet and Republican lawmakers sipped wine, beer and soda and watched the speech on a big-screen television in Wilson’s office courtyard, the governor said the budget must be balanced in one year without raising taxes, even if it means painful cuts for the poor, the sick and public schools.

The speech, according to Wilson aides, was designed to show Democratic lawmakers that Wilson, unlike a year ago, means it when he says he will not yield to the Legislature’s majority party. Wilson drove home that point after the address by telling reporters that he would be willing to go to the November elections without a budget rather than agree to raise taxes and roll over the deficit.

“I would rather do that (wait until November) than take this terrible misstep from which the state would never recover,” Wilson said.

Wilson has proposed 15% cuts in health and welfare programs, including a 10% to 25% reduction in aid to poor mothers and their children. His Administration has said a 15% cut in health services could mean, among other things, forcing invalids out of nursing homes after eight months and eliminating state-paid medical care for the working poor whose catastrophic illnesses threaten to bankrupt them.

The governor also wants to cut about $200 per student--or 4.5%--from public schools and raise university fees while cutting the higher education budget by 11%.

“Just as you’ve had to cut back, state government must cut back,” Wilson told his television audience. . “It must make deep spending cuts if we are to restore California to the economic health and stability that we have known in the past.

“Some legislators just don’t get it. Californians aren’t taxed too little, state government is spending too much.”

The state will spend about $44 billion from its general fund this year and Wilson has proposed spending about $40 billion next year.

But Democrats say Wilson’s proposed reductions are deeper than what is needed to get the state out of its fiscal predicament. They want to protect budgets for kindergarten through community college, but have accepted 4.5% cuts in welfare grants and aid to the aged, blind and disabled, and have proposed cuts of 7% to 10% in higher education, prisons and other programs.

To soften the impact of the reductions, the Democrats propose spreading repayment of the deficit over the next two fiscal years and raising taxes, either by suspending the indexing of income tax brackets or by taking more from businesses and the affluent. They also want to extend a temporary, half-cent sales tax for a year.

Both Wilson and the Democratic leaders favor taking at least $1 billion from local government while giving greater local authority to raise taxes.

Democrats say their plan would bring the state through the recession without destroying programs and end in 24 months with a $700-million reserve.

“It’s a sound, two-year balanced plan,” said Assemblyman Vasconcellos. “We’ve thought a lot about it. It ain’t happy. It ain’t pleasing. We think it’s smart--rather than decimate kids’ lives and food and health and education and be paying more forever. He would bankrupt the state forever.”

But Wilson said the Democratic plan to spread the deficit repayment over two years will not work if the recession continues and state revenues plunge again.

“The Democratic leaders of the Legislature are quite willing to gamble California’s and your future that good times are around the corner,” Wilson said. “Don’t you believe it. . . . What they are prescribing is a double disaster.”

The key to the budget battle appears to be how lawmakers and the governor will handle public school spending. They must act by Monday if they are going to take back $1.1 billion that the schools have been granted this year in excess of what is required by Proposition 98, the voter-approved constitutional amendment. That tactic would have the effect of cutting school funding by $2 billion below the $25 billion that schools otherwise would receive for the 1992-93 academic year.

Democrats have agreed to a $600-million cut for next year. But Wilson said that without the full $2 billion from schools he would have to recast his entire budget plan and make much deeper reductions in health and welfare programs, prisons and universities.

“Many of these cuts would be truly repugnant,” he said.

If the stalemate continues past the end of the fiscal year Tuesday, the state will begin to pay its bills with IOUs for the first time since the Great Depression, according to state Controller Gray Davis.

Many Democrats believe that Wilson wants to trigger such a crisis to further his effort to elect a Republican majority to the Assembly and win passage of his initiative on the November ballot, which would cut welfare grants and transfer budget powers from the Legislature to the governor.

Indeed, despite accusing Democrats of going “AWOL,” Wilson has yet to produce his own detailed plan for balancing the budget. He has sketched his proposal in broad terms, giving percentage cuts for each agency, but has not said how those cuts would affect services.

Wilson denied that he has failed to negotiate in good faith. “No one can accuse us of not having tried to work with the Democrats and having tried to get a budget,” Wilson told reporters after his address.

The Democrats took a step Thursday to preempt one part of Wilson’s fall initiative--a provision that would deny legislators and the governor their pay if a budget is not passed on time. The Democratic leaders asked Controller Davis to withhold salaries and living expenses for lawmakers from July 1 until a budget is passed. At that time, they would be paid retroactively.

Times staff writer Jerry Gillam contributed to this report.