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Committee OKs Plan to End Budget Deadlock : Legislature: Deal would trim local government funds, state jobs. Wilson says he probably would veto it.

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TIMES STAFF WRITER

Seizing the political initiative from Gov. Pete Wilson, the Legislature’s budget-writing conference committee on Friday passed a renegade Republican’s alternative spending plan and sent it to the Assembly and Senate floors.

The proposed budget would cut deeper into local governments and the state bureaucracy than Wilson has been willing to accept but falls far short of meeting the governor’s demand for a reduction in education funding. When it comes up for a vote in both houses Sunday night, it will be the first spending plan with bipartisan support to reach the floor of either house of the Legislature this year.

Wilson, who has been trying to draft a budget in private meetings with legislative leaders, said the alternative plan is “unbalanced” and that he probably would veto the bill if it came to his desk in its present form.

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But the measure has the support of Democratic leaders and is rapidly gaining momentum among rank-and-file Republican lawmakers eager to break a stalemate that has sent the state a record 39 days into the fiscal year without a budget. The budget needs at least one Republican vote in the Senate and seven in the Assembly to get the two-thirds majority needed for passage. A two-thirds majority is also needed to override a veto.

“This is the art of compromise in its truest sense,” said Sen. Frank Hill (R-Whittier), who broke with the governor to draft the proposal and is vigorously lobbying his fellow GOP lawmakers to ignore their leaders and vote for his plan.

Hill joined with the four Democrats on the conference committee to pass the measure on a 5-1 vote. Assemblywoman Cathie Wright of Simi Valley, who represents the Assembly Republican leadership and is the governor’s only remaining ally on the panel, cast the lone vote against the bill.

“It’s time,” said Democratic Assemblyman John Vasconcellos of Santa Clara, the committee’s vice chairman. “It’s long past time to solve the problem rather than being a part of it.”

The committee’s approval came after a session in which the members breezed through more than two dozen items, some calling for major changes in the operation of state and local governments, with hardly any debate.

In one move, the panel voted to shift $150 million in transportation money from local governments to the state--a transfer discussed publicly for the first time Friday morning. A moment later, the members decided to hold back a big chunk of funding from the state Energy Commission and the Public Utilities Commission as leverage to force the parallel agencies to discuss a possible merger.

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The panel also voted to eliminate hundreds of vacant job slots from the state bureaucracy, a move the Administration opposed.

And in hopes of securing the votes of conservative Assembly Republicans with whom Hill has been negotiating, the panel, just before it adjourned, eliminated funding for the Commission on the Status of Women and struck from the budget $5 million that Wilson wants to add to the Office of Family Planning.

The committee, coming close to breaking an informal agreement that the new budget would not include a tax increase, voted to count a $75-million revenue gain that would come from passage of a bill to make the the state tax code conform with federal law. The measure would bring in additional payments from foreign-based corporations.

But the budget battle probably will be decided on much broader issues.

On school spending, Wilson wants to reduce his $25-billion January proposal by about $2 billion, while the Assembly Democrats have been willing to cut only $605 million. The Hill plan that progressed Friday settles on a figure of $851 million. He said that number still would allow the schools to spend the same amount per student next year that they did in the fiscal year that ended June 30.

On local government, Wilson and legislative leaders have discussed shifting $1.3 billion in tax revenues to the state from cities, counties and special districts, though the governor has yet to agree to any move that would affect cities. Hill’s plan increases the amount being shifted to $1.7 billion by taking $160 million from the cities, $740 million from the counties, and the rest from special districts and redevelopment agencies.

If the fragile compromise is to unravel, it probably will be when legislators begin to inspect more than a dozen pieces of legislation--known as “trailer bills”--needed to make the budget work. Among the key issues in those bills: how to structure the education funding cut and how much freedom to give counties to run health and welfare programs as they please.

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The education cut, depending on how the bill is drafted, could produce a temporary dip in the growth of school funding or a long-term reduction in state support for education. The question arises because the state Constitution requires that each year’s education budget be built on a base of what the schools got the year before.

Similarly, on local governments, the level of funding might not be as important as the implementing legislation, which will decide how much flexibility the counties will get on health and welfare programs.

Wilson contends that the counties will cut public safety services if they are not given more freedom to reduce spending on health and welfare programs. Democrats have agreed to grant much, but not all, of what the counties are asking for.

The governor, speaking to reporters in his office, downplayed the apparent rebellion in the Republican ranks, describing it as no more than an “expression of fatigue and impatience.”

“I can’t believe that anybody in a momentary expression of pique is going to vote for something that is going to gut police and fire protection in order simply to have a tiresome process done,” he said.

And Wilson, who suggested Wednesday that the Hill plan would get only one vote--Hill’s--said Friday that he would work to defeat the measure Sunday if necessary, but doubted he would need to. Wilson said his meetings with legislative leaders, which continued Friday and will resume Sunday afternoon, are slowly producing progress that eventually will result in a budget.

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Hill, however, said he has six or eight Senate Republicans leaning toward voting for his plan, and interviews by The Times confirmed the count. In the Assembly, two Republicans have committed publicly to voting for the Hill plan, and several more are known to be considering it.

“What is there for a Republican to object to in this budget?” Hill asked. “There’s no taxes. There’s no rollover (of the deficit). At a certain point Republicans have to know when to stand up and say we’ve won the war; we have to declare victory.”

Republican Sen. Rebecca Morgan of Los Altos, a Wilson ally who faces a tough battle for reelection in November, said in an interview that members are growing weary of seeing their images tarnished while legislative leaders feud with the governor’s office.

“I don’t think any of us should take our reelection for granted,” Morgan said. “Every day the calls get angrier. It’s so complex they (voters) can’t comprehend the impact. Right now they just see the people aren’t getting paid, and that’s the Legislature’s and the governor’s fault, and they’re mad.”

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