Key Senate Republican Offers New Budget Plan : Finances: The proposal by O.C.’s Hill on cuts for schools and local government could solve state’s fiscal crisis this week if Democrats agree.

Frustrated at the inability of Gov. Pete Wilson and legislative leaders to bring the state’s record-breaking budget stalemate to an end, a key Senate Republican on Monday offered a plan that, if accepted by Democrats, could resolve California’s fiscal crisis by week’s end.

Sen. Frank Hill of Whittier, who represents a part of Orange County and Senate Republicans on the Legislature’s joint budget-writing committee, spelled out for Democrats what it would take to get his vote to send a spending plan to the floors of the Senate and Assembly.

Hill’s support for such a budget would make it the first full spending plan to reach the floor of either house with bipartisan support. The move could seriously undermine Wilson’s attempt to blame Democratic lawmakers for the deadlock.

The plan, which Democrats were weighing in private meetings Monday evening, would cut deeper into local government than Wilson has agreed to and far less into the public schools than the governor has proposed. It includes no new taxes.

Hill offered the proposal to Assembly Speaker Willie Brown of San Francisco and Senate Leader David A. Roberti of Van Nuys after the pair of Democratic leaders met for the fourth time in five days with Wilson and Republican leaders from the Senate and Assembly.

Those closed-door sessions, according to participants, have focused on secondary issues. Wilson and the legislative leaders say they have yet to resolve difficult questions about education, local government and health and welfare spending. Separate talks between Wilson representatives and the California Teachers Assn. also have failed to bear fruit.

Wilson and the legislative leaders have predicted that it will be at least next week before they agree on a budget. With the state now 35 days into the fiscal year and still issuing IOUs to pay its bills, rank-and-file lawmakers are growing increasingly weary of the stand-off.

“They’re doing now what they should have done a month ago,” Hill said of Wilson and the leading lawmakers.

Hill’s latest plan, which refines a proposal he offered with a Democratic assemblyman last month, differs from others under consideration on two key points--education and local government.

Wilson wants to cut education spending by $2 billion from the level he proposed in January, then lend the schools some of that money back to help them keep pace with growing enrollments. The schools would repay the loan by receiving less than they are entitled to from the state in future years. Assembly Democrats have supported a cut of $605 million.

Hill’s plan would cut school spending $910 million below the level in Wilson’s January budget.

“I’ve never felt like it was a victory to cut into education,” Hill said in an interview.

State Supt. of Public Instruction Bill Honig said he believes that schools should not be cut any deeper than the reductions to which the Assembly Democrats have agreed. But he said Hill’s plan was “somewhat near” what the education community was willing to accept.

Reaction to the local government portion of Hill’s plan was far more negative.

Hill proposed to phase out the state’s post-Proposition 13 bailout of county governments over the next two years, which would mean a $740-million reduction for counties this year. Cities would lose their bailout money over five years, which would translate into a $180-million cut this year.

Hill also proposed a $470-million cut for special districts that provide everything from fire service to libraries and a $350-million cut in redevelopment agencies.

The total package would amount to a $1.7-billion shift of property tax and other money from local governments. Wilson and the legislative leaders are studying a $1.3-billion transfer.

Dan Wall, a lobbyist for county governments, which are responsible for providing health and welfare services to the poor, said the cut Hill proposed would devastate the counties’ ability to do their jobs. Although counties have agreed to a $400-million reduction and have been working with the governor and legislators to try to make it work, Wall said they would not go along with the Hill plan.

“If they do that, we’ll go ballistic,” Wall said. “We’ll try to kill everything.”

Dan Schnur, the governor’s chief spokesman, said the Administration doubted that Hill’s plan could work.

“We have to assume that if this was a legitimate proposal, Sen. Hill would have offered it to the leaders of his own party rather than going behind their backs and going straight to the Democrats,” Schnur said.