Low-Wage Earners Latest Victims of Budget Stalemate : Finances: Wilson rejects request from Controller Davis, saying there is no authority to pay 157,000 workers who help the homebound elderly and disabled.

Thousands of low-wage workers who help care for homebound elderly and disabled people became the latest casualties of the state’s protracted budget battle Tuesday when the Wilson Administration said that the government has no legal authority to pay them.

Gov. Pete Wilson, acting through his Department of Social Services, rejected a request from Controller Gray Davis to provide payroll information Davis said he needed to issue checks to the workers.

The 157,000 workers, most of whom are paid the minimum wage, provide services that allow elderly, blind and disabled people to live independently in their own homes. The services, including shopping, cooking, cleaning and transportation for doctor visits, are designed to save the state money by keeping the recipients out of costly hospitals, nursing homes and other institutions.

The dispute between Davis and Wilson arose as the state closed its 49th day--seven full weeks into the fiscal year--without a spending plan.

Although both houses of the Legislature had scheduled votes for Tuesday on Wilson’s proposed budget and a competing plan supported by Democrats, the showdown was postponed for at least a day because the Administration continued to make changes in its proposal.

Speaker Willie Brown (D-San Francisco) said the Assembly will begin voting on parts of the governor’s package today--even if the Administration is not ready. The votes are to begin with the “trailer bills,” more than a dozen pieces of legislation that change state laws in ways needed to make either budget work.

Brown, who has been at odds with Wilson over the budget since June, seemed to be headed toward another confrontation with the governor. He said each of the governor’s bills would be subject to amendments as it came up. That means the Democrats, who control the house, can change the governor’s package before it ever gets to a final vote.

Senate Leader David Roberti (D-Van Nuys) was taking a different tack. He said he was negotiating with Wilson and Senate Republican Leader Ken Maddy of Fresno in hopes of reaching a compromise that could win the votes of Democrats and Republicans.

Until a budget is enacted, the state has no legal authority to pay many of its bills. The schools are paid because the state Constitution requires it. Welfare recipients are getting their money because a federal court ruled that they must. State workers are being paid because the governor and the Legislature, fearing the state would be liable for damages under federal labor law, enacted an emergency measure to allow it.

But a federal judge last week ruled that state need not pay hospitals and doctors who care for the poor or the In-Home Supportive Services workers. Without that order, Davis said he had no authority to pay the doctors and hospitals. But Tuesday he said he believed he should pay the in-home workers because earlier court cases had defined them as state employees, and state employees are being paid.

“It would be unconscionable to deny payment to workers who have already provided services and are legally entitled to be paid,” Davis said. He asked the Administration to hand over pay sheets showing how much the workers should be paid.

But a spokeswoman for Wilson said the Administration would not comply.

“We would like nothing more than to have the authority to cut checks for IHSS workers,” said Kassy Perry, Wilson’s deputy communications director. “Without court authority, without a budget, we do not have the ability to pay them.”

Perry said the answer was for the Legislature to act quickly on the governor’s budget proposal. The in-home workers are paid twice a month, although checks normally are issued daily to some of the workers. In July, about 13,600 checks were issued each day.

“This is the group that can least afford to be caught in the middle of a budget impasse,” she said.

In other action Tuesday, the state’s largest health insurer, Blue Cross, offered to assist hospitals facing critical cash-flow problems following last week’s decision by state officials to stop all Medi-Cal payments until a new state budget is signed.

The insurer has set aside $15 million to provide short-term, no-interest loans to hospitals serving a high volume of patients covered by Medi-Cal. These hospitals generally are located in poor neighborhoods, with Medi-Cal contributing as much as half of their operating revenues. Losing the income even for a week or two could force drastic service cuts. The loans are to ensure continuation of essential emergency, obstetrical and pediatric services at these hospitals, Blue Cross officials said. In addition, Blue Cross Chairman Leonard D. Schaeffer said the company will accept as much as $15 million in state Medi-Cal IOUs that banks have refused to cash for hospitals. Most banks accepted the IOUs in the first weeks of the budget impasse, but many are no longer taking them. Last week, Childrens Hospital of Los Angeles was holding $2 million in IOUs that its bank, Bank of America, refused to cash.

Blue Cross and the Hospital Council of Southern California drafted the bailout plan over the weekend, following last Thursday’s announcement by state officials that they would no longer issue IOUs to cover Medi-Cal obligations.

Anthony Abbate, senior vice president of the hospital council, said news of the loan and IOU acceptance plan was faxed to hospitals throughout Southern California at noon Tuesday. By 5 p.m., eight hospitals had called to apply.

To qualify, hospitals must rely on Medi-Cal for at least 10% of their income, must demonstrate that their services are in imminent danger of closure, and must pledge to continue emergency, pediatric and obstetrical services to the poor.

Times staff writer Irene Wielawski contributed to this report.

State Budget Watch

On the state’s 49th day without a budget, these were the key developments in Sacramento:

THE PROBLEM: Legislators and Gov. Pete Wilson need to bridge a $10.7-billion gap between anticipated revenues and the amount it would take to continue all programs at their current levels, rebuild a reserve for emergencies and erase last year’s deficit. The state is short of cash and, without a budget for the fiscal year that began July 1, cannot borrow money to pay its bills. Instead, claims are being paid with IOUs known as registered warrants.

IOUs

Issued Tuesday: 9,240, with a value of $13.9 million

Since July 1: 1.19 million, with a total value of $2.74 billion.

Interest costs to date: $6.4 million.

GOV. PETE WILSON: Took no budget-related action.

THE LEGISLATURE: The Assembly and Senate met but did not act on budget issues. Assembly Speaker Willie Brown (D-San Francisco) said the house would vote on Wilson’s budget proposal today.

OTHER ACTIVITY: The Wilson Administration, rejecting a request by Controller Gray Davis, ruled that the state had no legal authority without a budget to pay thousands of low-wage workers who care for homebound blind, elderly and disabled people.

California’s failure to pass a budget could result in lower short-term credit ratings for some of the state’s 58 counties, Moody’s Investors Service said. The Wall Street firm said the state’s issuance of IOUs to counties, coupled with the refusal of many banks to cash the registered warrants, may soon cause cash shortages in many counties.