Wilson Sees Cutbacks as Permanent : Spending: Funding for higher education and local governments will not return to former levels even if the economy rebounds, governor says.

Gov. Pete Wilson says he does not foresee a time--even in a booming economy--when student fees at California’s universities will be reduced to their old levels or when local governments regain their lost money from Sacramento.

The reckoning is now and the tempering of state largess is permanent, the governor indicated in recent conversations with The Times after the budget was signed. “Our generosity has out-spanned our prosperity by a couple of years. . . . We have been living beyond our means,” he said.

“California has been providing heavy subsidies to any number of programs. . . . It has had a very rich system of services, far richer than most other states, whether we’re talking about welfare, health care, education and some subventions to local government.”

To many residents, especially native Californians, this has contributed to the state’s prized quality of life. But to Wilson and other Republicans, it has resulted in excess taxation that has driven away businesses and jobs.

The recession-plagued $57.4-billion state budget that Wilson signed early Wednesday, ending two months of embarrassing IOUs and political gridlock, cut deeply into most state programs. And it forced hefty fee increases on college students--$372 a year at California State University campuses and $550 at the University of California.

At CSU, average annual fees rose to $1,308, in addition to the expenses for room, board and books. At UC, the fees will average $3,036. Only a decade ago, fees averaged $252 at Cal State and $938 at UC.

Asked whether he envisioned paring back college fees to their 1991-92 levels once the economy rebounds and tax revenues start rolling in, the governor said: “Probably not, simply because of competition for the funds.”

Then he went on at length, returning to the subject several times, as to why he deeply believes that the higher fees are a matter of equity.

“Should we ask low- and moderate-income working families to pay higher tax subsidies for the education of kids who can afford it?” Wilson asked. “I mean, these kids are getting an education that is not only an enormous cultural enrichment, as a result of it their earning power will be substantially enhanced. . . . For students to receive a comparable education elsewhere they would have to pay far, far more than they pay in the way of student fees here.”

The Yale-educated governor added: “It isn’t that we can’t afford the higher education system we had before. It is that we can no longer ask taxpayers to as heavily subsidize the students who are able to pay for that education. It’s the question of equity. It’s kind of interesting. I’m making the argument that the Democrats ought to be making.

“It is not fair for a truck driver, with a family of four, to have to pay more (taxes) to subsidize the education of the CSU or UC student whose family may be making double the salary of the truck driver.”

Critics would say that if the truck driver’s children wanted to go to college, they might not be able to afford the higher fees. Wilson’s reply would be that scholarships and loans are available for the financially needy. And more should be available, he says.

But the reality is that the Cal Grant Program, which provides this student aid, was slashed in the budget by $26 million, or 15%. “That’s one of the more painful cuts we had to make,” the governor said.

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At the university campuses and also at community colleges, Wilson said, it is a choice between lowering quality, reducing student enrollment or raising fees--and the higher education Establishment, as well as the state Capitol, opted for the latter.

Wilson scoffed at the community college fees, which he tried to raise to $20 per unit, but settled for $10 for most students. They had been $6.

“My God, $6 a unit!” Wilson said. “Ten dollars a unit! . . . Even a fee increase to $20 would be an incredible bargain. There is no other state that is a close second to California in terms of the subsidies we provide.”

Since 1978, when taxpayers revolted and passed Proposition 13, Sacramento has been heavily subsidizing local governments through a complex shell game with property taxes. Now those days are history, Wilson said. The budget took $1.3 billion from local governments and gave it to schools so state government could spend that much less on schools. The hit came to $525 million for counties, $200 million for cities, $375 million for special districts and $200 million for redevelopment agencies.

Wilson was asked: Should local governments just figure on never seeing that kind of money again? “That’s right,” he said. “I wouldn’t count on it.”

He noted that the budget package helped counties by eliminating some mandates that required them to be the provider of last resort for down-and-out adults and the medically indigent. He added that counties can raise their sales taxes and cities have other revenue sources.

So in response to the hue and cry from many local governments--especially counties--that they will not be able to make ends meet, the governor said: “I would submit at this point they are unprepared to make that statement. . . . They have not acted upon the new authority they have to reduce their spending in accordance with the relief on mandates. So who the hell’s in a position to say! It’s now an exercise of political will at the local level (and) they haven’t exercised it.”

Wilson echoed the Capitol’s general weariness with providing bailout money to help local governments cope with Proposition 13.

“Proposition 13 passed a long time ago,” the former San Diego mayor said. “When (the bailout bill) passed, it was thought by the Legislature to be a stopgap to allow a transitional period for cities and counties to devise alternative means of financing to replace (lost) property taxes. It’s been 14 years.”

Wilson also said there should be relief from mandates for school districts, along with the ability to generate some tax revenues. He did not have a specific suggestion, but said: “It is important that schools be involved in raising some of their own money. Right now they don’t have the same incentives (for efficiency) as cities and counties who have to ask the taxpayers for money.”

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The governor, a bitter foe of teachers unions, added that if school boards could raise their own money “you’d have some real accountability. School boards now spend money they don’t raise, and in many cases engage in multi-year collective bargaining agreements they can’t afford. They’re simply betting on the come.”

He noted that before Proposition 13, school districts set their property tax rates. “It was a time when we had better education and more responsible administration,” he said.

Responding to critics who say that the budget is long on gimmicks and short on reform, Wilson argued that it “stopped autopilot spending” in many areas, particularly welfare and health care. He also listed the county mandate reliefs and the college fee increases as reform.

Regarding the mandates, he said “that is the fulfillment of a campaign pledge I wasn’t sure how long it would take to get.”

But overall, he conceded, “there are no political winners in this. The public knows only that because of this protracted budget struggle a lot of innocent people suffered hardship and they don’t know why. They assume that it’s just political egos struggling and they figure a plague on both your houses (gubernatorial and legislative).”

Wilson will try to bounce back politically by focusing the public’s attention on his efforts to create private-sector jobs and make California more competitive economically. In that regard, he plans to call the Legislature into special session soon to reform the troubled workers’ compensation system and to act on other pro-business issues.

But first, he said, “It wouldn’t be a bad thing for them (legislators) to go home and find out just how the public feels. They need a little rest. My advice to them is don’t appear publicly before Labor Day.”