Treasurer Says Wilson Downplays State’s Fiscal Fix

Treasurer Kathleen Brown called Monday for suspending school-funding guarantees to pay off what she calls a growing $4-billion state budget deficit, and recommended that the governor be given new emergency powers in hard economic times.

Brown said that Gov. Pete Wilson is understating the size of California’s deficit, “papering over” problems with short-term borrowing and giving an overly rosy view of anticipated revenues next year.

With a top aide to Wilson looking on, and Brown offering what she called a “truthful” assessment of California’s troubled financial picture, Brown’s news conference was heavy on the trappings of 1994 gubernatorial campaign politics.

Brown, a likely candidate for governor next year, repeated her suggestion that the state extend a temporary half-cent sales tax to help pay the state’s bills.

Elaborating on a financial outline she proposed recently, Brown suggested that the state set up an agency called the California Economic Recovery Authority to pay off the deficit.

The agency would use revenue from the half-cent sales tax--$1.5 billion a year--to eliminate over three years what she says is a $4-billion deficit.

The extra sales tax will expire at the end of next month unless the Legislature and Wilson agree to extend it. Wilson opposes an extension, but proposed last week that individual counties vote on sales tax surcharges in November.

Dan Schnur, the governor’s chief spokesman, attended Brown’s news conference and before she spoke, Schnur gave reporters copies of a San Francisco newspaper column critical of Brown for being short on specifics.

After Brown completed her remarks, Schnur retreated to a hallway, explaining he was there to defend his boss’s budget against attacks by Brown--describing her as “somebody who wants to raise taxes on the people of California.”

“There was a lot more politics here than policy,” Schnur said.

In a potentially controversial move, Brown suggested that schools not get a piece of the money generated by the half-cent sales tax. She said there would have to be a “one-time waiver” of the constitutional requirement that schools receive a set percentage of general tax revenue.

Brown was quick to say that schools should continue to receive their current funding of $4,187 per student per year.

Brown offered no specific spending cuts. Nor did she pass judgment on cuts being proposed in Wilson’s $51-billion budget. But she did say she endorses “the concept of specific cuts.”

As it is, state budget experts say, the gap between demands for state money to continue ongoing state services and expected revenue approaches $10 billion.

The budget deficit makes up a part of that $10-billion shortfall. Under Brown’s plan--paying off the $4-billion deficit over three years--the governor and Legislature would have to cut only $6 billion in the 1993-1994 budget, she said.

Brown recommended the Legislature grant the governor emergency powers for fiscal crises, but said she envisions far less authority than Wilson proposed last November in his failed Proposition 165. She opposed the initiative.

Brown also called for a cap on borrowing, together with a series of automatic “triggers” that would kick in to cut spending or raise taxes if revenue unexpectedly decreases.

Wilson and Brown agree that there is a deficit. But the treasurer places the deficit at $4 billion. That number includes roughly $1.5 billion in loans granted to schools this year and proposed for next year to maintain per-pupil education funding levels.

Wilson does not include the school loans as part of his deficit calculation. Although Brown has called for paying off the debt over three years, Wilson would extend it over 18 months.