Prop. 165 Renews Conflict Over Balance of Powers : Initiative: Wilson wants budgetary changes to control spending. Critics say it is too much authority.

Two years into his first term as mayor of San Diego, a young Pete Wilson placed on the ballot a fundamental change in the City Charter that would have transformed Wilson’s largely ceremonial post into a chief executive with veto power over the City Council.

But the measure’s opponents portrayed it as a power grab, and the city’s voters soundly rejected it, handing the popular, reformist mayor a stunning defeat.

Now, two decades later and two years into his first term as governor, Wilson again is seeking to expand dramatically the powers of the office he holds. He has qualified Proposition 165 for the ballot, a measure that would vastly widen the governor’s dominion over the state budget, forcing lawmakers to give Wilson what he wants or risk watching him place his plan into law without a vote of the Legislature.

Wilson’s aides say that this shift in the constitutional balance of powers is crucial if the state is to get spending under control and avoid another prolonged stalemate like the one that kept this year’s budget from being enacted until 64 days into the fiscal year.

Opponents of Proposition 165 say Wilson is most to blame for the budget deadlock and cannot be trusted with the enhanced power he is seeking. They warn that the measure is unclear in crucial spots and could produce unintended consequences that would worsen the state’s fiscal condition.

Although Proposition 165 is best known for a section that would reduce welfare grants to poor parents and their children, the measure’s budget powers provisions have far broader implications for state government. They would allow a governor in some cases to cut welfare grants unilaterally even if the grant reductions were not part of the initiative.

The governor’s powers under Proposition 165 apparently would exceed those of any other state chief executive in the country.

Wilson’s proposal goes to the heart of a conflict as old as America’s system of government: the balance between the executive and legislative powers of government, or, the battle between efficiency and democracy.

“In the United States, government is not set up to get things done,” said John Ellwood, a professor of public policy at UC Berkeley. “It is set up to prevent interest groups from gaining control over the entire system. It’s the old idea--dictatorships make the trains run on time. The point is, are we willing to sacrifice some efficiency in order to maintain our liberties?”

Wilson’s measure, Ellwood said, would make California’s budget process more efficient. But it also would make it less democratic.

Proposition 165 would give the governor more time to prepare a budget and the Legislature less time to deliberate and pass one. It also would increase the Legislature’s incentive to pass the spending plan on time. Specifically, it would:

* Require the governor to submit a budget to the Legislature by March 1, instead of the current Jan. 10 deadline.

* Suspend the salaries and travel and living expenses of lawmakers and the governor if the Legislature fails to pass a budget by the constitutional deadline of June 15.

* Allow the governor to declare a fiscal emergency if the budget is not enacted by the July 1 start of the fiscal year. The governor then could order that spending continue at the rate called for in the previous year’s budget. And the governor could order cuts to balance the budget, except in areas protected by the Constitution, such as education and debt service payments. The cuts would take effect in 30 days unless the Legislature passed an alternative and the governor signed it.

* Give the governor the power to order reductions whenever revenues, expenses or both were off by 3% or more. These cuts would take effect in 30 days unless the Legislature passed an alternative and the governor signed it.

* Allow the governor, during a fiscal emergency, to reduce by 5% the pay of state workers not protected by union-negotiated contracts.

Supporters, including the California Taxpayers Assn., say that the state’s recent fiscal history is proof that Wilson’s measure is needed.

In 1990, lawmakers and the governor faced a $3-billion gap between anticipated revenues and the projected cost of erasing a deficit, rebuilding a reserve for emergencies and continuing all programs and services at the previous year’s level. Then-Gov. George Deukmejian and the Legislature stood their ground until July 31, a month into the fiscal year, before agreeing on a compromise.

A year later, Wilson’s first year as governor, the projected budget gap was $14.3 billion. Wilson led an effort to erase the shortfall with about $7.5 billion in tax hikes, $3 billion in cuts, and some bookkeeping shifts and transfers. The Legislature passed the budget before July 1 but Wilson withheld his signature until July 16 because of a dispute over workers’ compensation issues.

That budget agreement, though hailed as a grand compromise, fell short of fixing the state’s problems. The stubborn recession kept tax revenues down, and the gap reappeared in 1992, this time reaching $10.7 billion. Wilson and legislators from both parties agreed to erase it with spending cuts alone. But it took them until Sept. 2, 64 days into the fiscal year, to agree on how to do it.

“Right now, California spending ratchets up every year, with little or no control by our elected officials,” said Amy Albright, a spokeswoman for the measure. “Proposition 165 not only would force the governor and the Legislature to pass a budget on time, it would force them to keep the budget balanced throughout the year.”

Steven Hayward of the Pacific Research Institute, a conservative think tank, said it makes sense to concentrate budgeting authority with the governor because the legislative branch is too vulnerable to pressures from special interests that want to maintain or expand every program.

“The legislative budget process has become so decayed and debased and gone so wrong in the last generation that this is a wise correction for it,” Hayward said. “The governor is the only person elected by all the people, and the political pressure on him is a little more broad and general.”

Opponents say the measure is an unwarranted shift in power from the legislative branch to the executive.

“This initiative grants almost dictatorial powers to the governor to set the budget as he sees fit,” said Drew Mendelson, a spokesman for the California State Employees Assn. “It removes the checks and balances that ought to be established.”

Because California’s budget must be passed by a two-thirds vote in each house of the Legislature, critics say Wilson’s measure would allow the governor and a minority of lawmakers to extort concessions from the majority party by blocking passage of the budget, forcing all members to go without pay and handing the governor the power to order cuts of his choice. Important long-term policy decisions--about state taxes and education funding, for instance--should not be influenced by the momentary discomfort of a lawmaker who cannot afford to go another day without a salary, opponents say.

Critics of the measure also complain that it appears to remove the Legislature’s traditional authority to override a governor’s veto of the budget bill. The initiative says that the governor’s unilateral cuts would remain in place until the Legislature passed--and the governor signed--an alternative. Presumably, if the governor vetoed the Legislature’s alternative plan, his cuts would remain in place even if the lawmakers voted to overturn the veto.

The initiative’s supporters insist that the disputed provision does not mean what it appears to say. They say the governor’s emergency powers would end as soon as a budget was enacted, whether with the governor’s signature or by the Legislature overriding his veto. Wilson has produced legal opinions supporting this position from a private law firm and Atty. Gen. Dan Lungren.

“It could have been written more clearly,” conceded Albright, the campaign spokeswoman. “But from Day One we have maintained that Proposition 165 does nothing to interfere with the Legislature’s ability to override a veto.”

Even if the Legislature retained its override powers, the measure would represent a profound shift to the executive branch.

Had the initiative been in effect this year, Wilson would have had the power to order cuts to bring the budget into balance during the spring, when revenues fell sharply below projections. Although the measure prohibits the governor from cutting education funding below the amount guaranteed by voter-approved Proposition 98, he could have made education cuts in the spring because the schools were getting more than Proposition 98 required. Democrats might have objected but would have been powerless to stop him without the cooperation of Republican legislators.

Once June 15 passed without a budget from the Legislature, the governor and lawmakers would have lost funding for their salaries, travel and living expenses.

After July 1, Wilson would have had the power to order the last fiscal year’s budget into place with cuts of his choosing. Presumably, these would have included his proposed 25% reduction in welfare grants, deep cuts in health care for the poor and sharp reductions for higher education.

The Democrats’ ability to resist, which they used this year to soften the blow on education, health and welfare programs, would have been next to nil. As long as Republican lawmakers stood with the governor, Democrats could not muster the votes to reject his proposed cuts.

Wilson, in an interview with The Times, insisted that his proposal simply fixes “an omission in the law” by providing a method to keep the state government running when no budget is passed by July 1. “There’s no change,” he said. “All we’ve done is alter the timetable.”

But the League of Women Voters, California Common Cause and even some Republican lawmakers say the shift in powers would result in a dangerous concentration of authority in the governor’s office.

“I worry about it,” said Republican Sen. Frank Hill of Whittier, who has had his differences with Wilson. “I wouldn’t have any problem supporting it if I were convinced that I’d have a Republican governor for the rest of my adult life in Sacramento. But I don’t think that will be the case.”

Hill also notes that last year, when Wilson was pushing for a big tax increase, the governor could have used the enhanced powers to railroad conservative Republicans into accepting his proposals. And Republicans, even if they held slight majorities in the Legislature, would be almost powerless to stop a Democratic governor who wanted to roll over the deficit into a future fiscal year, as many Democrats proposed this year.

“The governor could say: ‘If you’re not going to do what I want you to do, we’re not going to have a budget and you’re not going to get paid,’ ” Hill said.

A Wilson Administration study, noting that California’s governor has far less power over the budget than most state chief executives, says Wilson’s proposal would put him in the mainstream. But the study, by Wilson’s Office of Planning and Research, focused only on the power of governors to cut the budget during the year to keep it balanced. It ignored the most dramatic part of Wilson’s proposal, which would give California’s governor much greater leverage at the start of the fiscal year.

Albright said she knew of no state that allows the governor, without the consent of the Legislature, to continue the previous year’s budget after making cuts of his choice. But she said this maneuver would be only an interim measure because lawmakers eventually would pass a budget to end the state of emergency and begin getting paid again.