NEWS ANALYSIS : Wilson’s Huge Bill to U.S. Uses Sleight of Hand : Budget: Over half the $1.5 billion sought for spending on immigrants would need changes in the law by Congress, report states. Governor ‘pulled the wool over our eyes,’ a congressman says.

Confronted with yet another huge budget shortfall this year, California Gov. Pete Wilson and his top advisers hatched an innovative proposal to generate more than $1 billion in new money.

Instead of blaming immigrants for part of the state’s financial mess as he did last year, the governor decided to make the new arrivals part of the solution. He claimed in January that the federal government owes California close to $1.5 billion for the cost of providing immigration and refugee services required by Congress.

The governor even gave his plan a provocative slogan: A Failed Federal Promise.

Last week, Wilson and an entourage of top policy advisers took their case to the Congress, the White House and to a meeting of the nation’s governors. In an impressive show of political influence, Wilson succeeded in persuading his fellow governors and most members of the California congressional delegation that the federal bureaucracy had cheated large border states out of their fair share of immigrant funds.

It turns out, however, that more than half the $1.5 billion is not currently owed to California. Nor was it ever promised.

“Wilson has pulled the wool over our eyes,” said Rep. Robert T. Matsui (D-Sacramento), a member of the House Ways and Means Committee. “There’s no question there is an element of deception in all this.”

Wilson insists that the entire $1.5 billion is owed to California because immigration policy is a federal responsibility. He argues that Congress, where Wilson served as a senator through 1990, has abandoned its historical role as the provider for the nation’s immigrants and saddled the states with the heavy costs.

“We’re saying an obligation was created by federal law,” Wilson said. “It’s exclusively a federal obligation. It’s only fair the feds pay for it. The alternative is we have to cut other services for Californians. We don’t think that’s fair.”

Yet a budget analysis by the California Commission on State Finance concluded that the Wilson plan should be “viewed skeptically” because Congress would have to change federal Medicaid and welfare laws before it could begin to consider approving about half the money that the governor contends is owed to California.

With President Clinton, a former governor, in the White House and Sen. Dianne Feinstein (D-Calif.) on the Senate Appropriations Committee, the state would seem well-positioned to land a large portion of Wilson’s request. Asked by a reporter at the governor’s conference if he expected to get the funds, Wilson replied tersely: “Damned right I do.”

But many federal lawmakers warn that because $1.02 billion of the money Wilson requests would be new, it is unreasonable to expect that California will get anything close to the full amount. During a year when the federal government is coping with massive deficits and looking to cut programs, Congress is not about to rewrite laws to provide new money to states, Matsui said.

The Commission on State Finance report said the governor’s assumption that the state will receive a commitment for the $1.5 billion by a May 15 deadline is “unrealistic.”

If the full amount is not placed in the President’s budget by May 15, Wilson said, he will have no choice but to make further cuts in his $51.2-billion budget proposal. Among the programs he has threatened to cut are higher education, health and welfare benefits, assistance for the homeless, hearing aids and wheelchairs for the poor, and general health care for the working poor and their children.

California, more than any other state, has been affected by a huge influx of immigrants and refugees. The state is home to 1.5 million newly legalized residents, an estimated 1.3 million illegal immigrants and more than 600,000 refugees.

The cost of providing medical, welfare and education services to these newcomers is steep.

The state annually spends $485 million on welfare and $140 million in Medi-Cal payments for families of recent immigrants and refugees. Disabled refugees cost the state $20 million a year. The estimated cost of providing medical services to illegal immigrants is $489 million a year, plus $93 million for prenatal services. Children of illegal immigrants born here are U.S. citizens and receive $41 million in health services.

Kevin Scott, former executive director of the Commission on State Finance, said Wilson deserves credit for promoting the “legitimate claim” that California is entitled to compensation from the federal government for bearing a disproportionate share of arrivals to the United States.

But the governor’s assertion that the entire $1.5 billion consists of federal obligations is not “quite correct,” said Scott, who resigned last week to teach at the John F. Kennedy School of Government at Harvard University.

“In Clinton terms, this is a ‘new covenant’ the governor wants,” Scott said. “He is cloaking it as an old obligation. While there are promises that have been broken, much of the request is based on new promises that have to be made so that California is treated fairly.”

Dan Schnur, Wilson’s spokesman, said: “Either way, you are talking about a federal obligation. All of the verbal linguistics in the world aren’t going to change that. An overwhelming majority of the (California) delegation’s members understand what we’re doing is on behalf of their constituents.”

The $1.5 billion that Wilson is requesting would come from five government programs: $324 million in health and welfare costs for legalized immigrants; $250 million in prison costs for detaining illegal aliens (which Wilson has not previously requested); $104 million in refugee resettlement funds; $240 million to defray the costs of benefits for children of illegal immigrants, and $534 million in emergency medical services through the Medicaid program to illegal immigrants.

Wilson is seeking $678 million this year from the first three programs and his strongest argument for an obligation under the current law lies here. Although Congress required states to provide these programs, it has granted either no funding or substantially reduced dollars in recent years. President George Bush refused to put much of the money in his proposed budgets, and Congress raided some of the funds to pay for more politically popular health and human services programs.

But the $774 million for the other two programs is a state responsibility, according to the study by the Commission on State Finance. Congress would have to approve new laws making the programs entirely a federal responsibility before states could receive reimbursement.

While recognizing that federal laws must be rewritten if California is to receive the $774 million, the Wilson Adminstration contends that the distinctions between the various programs are “artificial”, said state Health and Welfare Secretary Russell Gould.

“We really see (all of the programs) as the same,” Gould said. “We are saying if the federal government is going to require services (for immigrants), they should pay for them.”

When Wilson unveiled his proposed budget last month, he took a calculated risk by including the $1.5 billion in federal funds without any assurances that the money is forthcoming.

His trip last week was the first of several planned visits to Washington to lobby for the funds, Schnur said. The governor is expected to return in March after Clinton unveils his 1994 budget.

Wilson and his entourage of five top aides and three security officers spent a busy four days in Washington.

Accompanied by his wife, Gayle, Wilson attended a black-tie dinner at the White House that Clinton held for governors during the second half of the Super Bowl. The Republican governor met privately with Office of Management and Budget Director Leon E. Panetta, Gov. Ann Richards (D-Tex.), Feinstein, Rep. Vic Fazio (D-Sacramento), Interior Secretary Bruce Babbitt and Secretary of Defense Les Aspin.

Along the way, Wilson chalked up some impressive accomplishments.

He persuaded the governors of four large states also affected by immigration--fellow Republican Jim Edgar of Illinois and Democrats Mario Cuomo of New York, Lawton Chiles of Florida and Richards--to sign a letter to Clinton. The letter called for the federal government to provide “full reimbursement” to the states for immigrant and refugee services.

During a bipartisan breakfast meeting, Wilson persuaded California lawmakers to join his battle. Afterward, many legislators emerged full of praise for the governor’s efforts.

But many said they were under the impression that all of the $1.5 billion is owed to California.

Rep. Don Edwards (D-San Jose), the dean of the California delegation who has spent three decades in Congress, reiterated Wilson’s contention that the federal government reneged on its promises.

“The governor made a point on which there is no disagreement,” Edwards said. “These are all 100% federal responsibilities.”

Rep. Jay C. Kim (R-Diamond Bar), the first Korean-American to serve in Congress and an immigrant, said: “Of course, I support Governor Wilson. He is absolutely right. The federal government has to take some responsibility. You can’t just mandate without paying for it. It’s absolute nonsense.”