Senate Deal May Offer Deeper Welfare Cuts : Budget: Reduction still would fall short of Wilson’s demands. Assembly works on its version of the state spending plan in a partisan atmosphere.

Senate leaders said Friday they were nearing agreement on a compromise budget deal that falls short of meeting Gov. Pete Wilson’s demands but cuts deeper into health and welfare programs than Democrats so far have accepted.

Senate President Pro Tem David A. Roberti (D-Van Nuys) and Republican Leader Ken Maddy of Fresno said an agreement could be ready for passage by Sunday.

They were working on a budget compromise without the direct involvement of Gov. Pete Wilson or the Assembly, which was crafting its version of the budget Friday in an atmosphere marked by more partisan division than in the Senate.

“We’re shopping ideas right now,” Maddy said in an interview. “If we’re successful in what we are suggesting to the members, it could get to the point where we will have largely wrapped up the budget. I’d love to see us come back here Sunday afternoon and be done with it.”

Roberti said: “The iceberg is melting a little bit.”

Both leaders said Wilson is being kept informed of their progress but is not personally participating in the development of their plan.

“At this point he hasn’t said for me to stop,” Maddy said of the governor. “So I continue to negotiate and continue to put forth the best possible compromise we can perfect in this house.”

Maddy and Roberti offered only sketchy details of their discussions and would provide no information on the crucial education spending issue, discord over which is the primary reason for budget deadlock, which enters its 53rd day today.

On local government, the leaders said they were considering the shift of about $1.3 billion in property taxes from cities, counties and special districts to help balance the state budget. That figure falls between the $1.1-billion cut that Wilson has accepted and the $1.7-billion shift adopted by the budget-writing conference committee.

On health issues, Roberti said he is prepared to accept Wilson’s proposed elimination of some Medi-Cal services the state now offers independently of the package of services required by the federal government. These include dental care for adults as well as hospice care for the terminally ill and such alternative services as acupuncture and chiropractic care.

Roberti said the Medi-Cal legislation, if he could sell it to other Democrats, would be drafted to give Wilson the authority to eliminate those services but not require him to do so. Wilson could cut prison spending to save the same amount of money if he chose to, Roberti said, although he conceded that such a prospect seemed unlikely.

Democrats also were considering a deeper cut in welfare grants than the 4.5% reduction that has been their position until now.

Roberti said the plan would call for varying the amount of the grant by region, with the cut ranging from 4.5% to 7.5%, depending on the cost of living in each area. He said he was proposing the regional grants to his colleagues as a substitute for the governor’s proposal to cut grants 10% immediately and another 15% for families with an able-bodied adult still on welfare after six months.

The Senate leaders on Friday were planning to have their members vote on five more “trailer bills”--the legislation needed to make the line-item budget work. Among the measures was one that would raise fees at the California State University system by 40% and another that would delay about $340 million in scheduled payments to the state employees pension fund.

The Senate is building its budget proposal from the bottom up by first considering the trailer bills, which got their name because they used to follow the budget measure. This year, however, the adoption of the trailer bills is defining the shape of the spending plan itself.

“Each trailer bill is like a dot that you connect and come up with a budget,” said Senate Majority Leader Barry Keene (D-Benicia).

The debate on the first trailer bill Friday gave Roberti and Maddy a sense of what they have in store. The Cal State fee increase, supported reluctantly by many senators, has long been expected to be part of any budget deal.

But as the fee bill came up, Sen. Diane Watson, a liberal Democrat from Los Angeles, complained that the Senate was taking the wrong approach on the budget.

“There are other places to cut,” she said. “For the life of me, I don’t understand why we are cutting the education, health and welfare institutions to balance this budget. Let’s go after the sacred cows of the governor.”

Maddy and Roberti both reacted angrily. Roberti complained that Watson and other opponents of the bill were seeking to appear “pure” at the expense of other members who were willing to compromise.

“The pure of heart in this budget debate are the ones who are going to compromise because that’s what the people of this state of California are demanding,” Roberti said.

The bill, which would save the state $116 million, passed on a 27-4 vote and was sent to the Assembly.

In the Assembly, meanwhile, the members plowed through several dozen Republican-sponsored amendments to a Democrat-crafted budget bill.

The Assembly voted to eliminate the state Energy Commission, for a savings of $33 million, and the Office of the State Architect to save $18 million. The Assembly--at the suggestion of Republican Tom McClintock of Thousand Oaks--also voted to cut Wilson’s office budget by 30%, for a savings of $2.8 million. But Democrats blocked an identical cut for the office of Lt. Gov. Leo T. McCarthy, a Democrat.

The Assembly also rejected a measure that would have enabled the state controller to pay $1.6 billion in claims from July, covering everything from doctor and hospital care for the poor to payments for businesses that deliver frozen foods to the state prisons.

“This is the fair and decent thing to do,” said Democratic Assemblyman Rusty Areias of San Jose, who pushed the bill on the Assembly floor. “It doesn’t take the pressure off us. It takes the pressure off the innocent victims of our indecision.”

The bill fell one vote short of passage.

The San Diego City Council on Friday approved a plan under which holders of state-issued IOUs can exchange them for cash from businesses, which could then use the warrants to pay state taxes.

Meeting in special session, the council voted 7 to 0 to approve the measure, which will take effect Aug. 31, the next state payday, but only if there is no budget by then. “The benefit here is that we will have people paying their mortgage, buying food at the grocery stores,” said Mayor Maureen O’Connor.

Times staff writers Jerry Gillam and Alan Abrahamson contributed to this story.