State Lawmakers See ’93 as Battle of the Budget II : Government: Leaders say struggles with cutbacks and the deficit will make for another painful session.

After weathering an unprecedented 64-day budget stalemate in 1992, watching 336 of their bills get vetoed and surviving a nasty election season, legislators say the new year can’t be much worse.

Then again, maybe it can.

“We sue for peace but prepare for war,” said Sen. Bill Lockyer (D-Hayward).

As the 1993 legislative year opens Monday, most of what made 1992 so miserable will not have changed. California is still mired in recession, and the projected state budget deficit is running at $7.5 billion, making a new budget battle all but inevitable.

“Topic A has to be the budget--trying to find revenue, trying to make ends meet, trying to maintain services,” Senate President Pro Tem David A. Roberti (D-Van Nuys) said.

Legislators know they will have to make painful cuts in state services and staff. But they will struggle to maintain steady funding for what they see as the most vital and popular state function--public education--even as they confront likely demands from Gov. Pete Wilson for more cutbacks and more fee increases in the public university systems. To help pay the bills, some Democrats talk of pushing for a tax increase, although Wilson and GOP legislators rule out a general tax hike.

Adding to the potential for rancor, legislators, looking for ways to boost business in these tough times, will revisit some of the most heavily lobbied money issues.

For now, several said, they are pushing aside the question of providing health care for 6 million uninsured Californians. But they will tackle the abuse-plagued, $11-billion workers’ compensation system. The Legislature’s goals, seemingly contradictory, are to lower the cost to businesses of insuring against on-the-job injuries and raise benefits for disabled workers.

Another issue certain to attract big-time lobbying from insurance, lawyer and business groups is the effort to limit lawsuits and damage awards. Wilson has called for such limits, a step that would be welcomed by businesses and opposed by the rich and influential trial lawyers’ lobby.

This is the year the “Napkin Deal,” a compromise over litigation issues fashioned at the end of the 1987 session, expires. In a classic piece of back-room politics, Assembly Speaker Willie Brown, Lockyer and several top lobbyists met at Frank Fat’s, a popular Sacramento watering hole. There they agreed that for five years, no one would sponsor ballot initiatives or major legislation on such issues as medical malpractice lawsuits, product liability, no-fault auto insurance and punitive damages.

The deal got its name--and a place in political lore--when Lockyer, a legislator with an eye for political theater, sketched out the details of the truce on one of Fat’s linen napkins.

The truce has held, more or less. But business and insurance groups want the Legislature to re-examine some of the issues, while lawyers want to lift caps on their fees and recoveries in malpractice suits against doctors. There is even a renewed drive to make it easier to sue tobacco companies for cancer deaths, though few believe such a measure could overcome the strong tobacco lobby to become law.

Of more immediate concern in the Los Angeles area, legislators plan efforts to ease environmental regulations on businesses. Assemblyman Richard Mountjoy (R-Arcadia) said he will introduce legislation to limit the South Coast Air Quality Management District’s authority to regulate Los Angeles-area business.

In another measure certain to grab attention in Los Angeles, Roberti, whose district is in the San Fernando Valley, plans to sponsor legislation to break up the 640,000-student Los Angeles Unified School District, a move that will gain urgency if a teachers strike threatened for late February takes place.

“We need some radical surgery somewhere,” Roberti said. “The answer is more autonomous units, more parental control and something that’s more cost effective.”

All the while, the federal investigation of corruption in the Capitol continues. The investigation, which burst into public view five years ago when the FBI searched legislative offices, could produce new indictments this year. That could fuel new efforts to overhaul the campaign and political system. Sen. Tom Hayden (D-Santa Monica) plans to introduce a reform package.

When legislators return to Sacramento, it will be four short months after the ugliest budget battle in California history, and two months after a hard-fought, often lowdown election campaign.

Campaign donors pumped more than $50 million into 100 Assembly and Senate races in 1992. Democrats kept control of both houses, with a 47-32 majority in the Assembly (one seat is vacant) and a 22-13 majority in the Senate (with two independents and three vacancies).

Legislators say voters sent a clear message in November: The bickering must end, cures for what ails California must be found, and fixing the state’s troubled economy must outweigh political concerns.

“There is an overriding desire on everyone’s part to move forward on the issues confronting us,” Roberti said.

In a jab at Speaker Brown, Roberti said that he held his tongue when Brown and the governor battled last year, but has resolved to not be so patient in 1993.

“Actually, I get along with the governor,” Roberti said. “The problem we had last year was major warfare between the governor and the Assembly, the leadership of the Assembly, the Speaker of the Assembly. I hope we’re over that.”

Brown blamed the “political insanity” of 1992 on election-year politics and Republicans’ unrealistic expectations that they would pick up seats in the Assembly and perhaps even seize control.

Despite the hurdles, Brown said, “there are clear signs that it is going to be a more harmonious season.”

“Necessity demands it,” said Dan Schnur, Wilson’s communication director.

Of course, cooperation could evaporate. “If either major player--the governor or the Legislature--wanted to slow down the process, it’s within their capability,” Schnur said. “But it’s not in either of our interests.”

Brown is planning what he calls an economic summit in February, hoping for legislative proposals to help California out of its economic funk. Wilson has endorsed it and offered to become a co-sponsor. But others are skeptical that the conference will help.

“Quite frankly,” Roberti said, “we (already) have a handle on what’s ailing California.”

Roberti hopes legislators can convince the Clinton Administration that the federal government must aid California by helping to finance a replacement for Southern California’s declining defense industry, infusing the state with capital and defraying the “staggering costs of immigration.”

“It is an unspoken issue,” Roberti said of immigration. “It’s on everybody’s mind, and we need to start talking about it in a friendly, open, tolerant way. But it is a problem that we can’t pussyfoot around.”

Wilson, who angered conservatives in 1991 when he agreed to $7.5 billion in tax increases, ruled out another hike this year. Taxes cannot be raised without Republican support because the act requires a two-thirds vote in both houses.

“I don’t know why we would want to prolong the recession,” said Assembly Minority Leader Jim Brulte (R-Rancho Cucamonga). “Taxes are not the answer. If they were, we would have had a booming economy following 1991.”

Brown also said income tax increases are not on the table. But the Speaker said he will push to reimpose the extra half-cent sales tax that is due to expire in June. The extra sales tax has brought roughly $1.5 billion a year into state coffers. That revenue is critical to ensuring that public school funding not be cut, Brown said.

Other Democrats raise the possibility of a tax increase similar to a proposal by President-elect Clinton to raise federal income taxes for upper-income earners.

“Anything is on the table when you face the most critical fiscal crisis this state has ever faced,” said Sen. Art Torres (D-Los Angeles). “ . . . The whole issue of taxing those who make over $200,000 is inevitably on the table. The sales tax stays on the table.”

Predictions about how the Legislature will act and vote always are dicey. That is particularly so in the upcoming session. Twenty-seven new members were elected this year, the largest freshman class since 1966.

More important, the freshmen are the first to be bound by the term limit measure passed by voters in 1990, which restricts their tenure to six years. The four new senators, all of whom came up from the Assembly, are limited to two four-year terms.

“There’s great potential for structural change,” said Kim Alexander of California Common Cause. “They can’t do what freshmen traditionally have done. If they want to see movement on their issues, they’re going to have to move much more quickly than they have in the past.”

Perhaps, she added, the freshmen will bring a more sober tone to the Assembly, where debate often degenerates into rudeness punctuated by epithets. But there is also the potential that the Assembly will be even more partisan. Eight of the 13 new Republicans received significant campaign money from the religious right.

Republicans already are accusing Brown of using high-handed tactics, pointing, for example, to his decision to pass over the GOP’s choices for vice chairmen of various committees. Brown insists that he wants to make the Assembly less partisan, and that the bruising election and budget battle of 1992 are dim memories.

“Voters vindicated my position,” Brown said. “That’s satisfactory for me. I don’t think it’s healthy for anyone to carry any of that over. I don’t think they elected me to come up here simply to wreak havoc on Pete Wilson’s carcass.”

Then, amending his use of the word carcass, he added: “On his body.”