Senate Passes Budget; More Fights Lie Ahead : Spending: Gov. Wilson says he won’t sign plan until legislators pass complete package. Spreading the pain of cutbacks remains key unresolved issue.

The state Senate passed a $52.1-billion budget early Tuesday and sent it to Gov. Pete Wilson before turning its attention to a multi-bill package of legislation needed to implement the spending plan.

The key issue yet to be decided late Tuesday was how to spread the pain among local governments from a $2.6-billion property tax shift that is the cornerstone of the budget bill on Wilson’s desk.

But several other matters also remained in flux as legislators sought to fill in the details of a broad agreement reached over the weekend by Wilson and the leaders of both parties and both houses of the Legislature. A key Democratic senator predicted a “battle royal” over these bills.

“The governor will sign the budget as soon as the entire legislative package is on his desk,” said Dan Schnur, Wilson’s chief spokesman.

The Senate passed the budget bill at 2:43 a.m. on a bare two-thirds vote of 27-11, with 15 Democrats, 10 Republicans and two independents voting in favor. Republican Sen. David Kelley of Hemet, on a fishing trip to Alaska, was the only absentee. The Assembly had passed the same bill Monday.

The Senate’s action came seven hours after the first vote on the bill left it 12 short of the two-thirds majority needed for passage. But a concerted lobbying effort by Wilson, Senate Republican Leader Ken Maddy of Fresno and Senate President Pro Tem David A. Roberti (D-Van Nuys) managed to persuade a number of senators to switch their votes.

Sen. Art Torres, a Los Angeles Democrat, provided a typical example.

“Sometimes we have to act upon our consciences to give meaning to our lives,” Torres said early in the evening when the bill was first debated. “This document is not sufficient.”

Hours later, the document hadn’t changed at all but Torres’ mind had.

“There comes a point where this gridlock has to end,” he told the Senate as he changed his vote.

Passage of the budget bill appeared to ensure that the state will have a new spending plan in effect when the fiscal year begins July 1. If so, it will be the first time that has happened since 1986. Last year, after a record 63-day stalemate, Wilson signed the budget Sept. 2.

The budget reduces state spending for the second consecutive year, but at the expense of local governments. Cities, counties and special districts would lose $2.6 billion in property tax revenues to schools, saving the state an identical amount it otherwise would be obligated to pay the schools from its treasury.

Local governments would recover part of that loss by receiving revenue from a six-month extension of a half-cent sales tax that was to expire June 30. In November, voters will be asked to make the tax permanent and dedicate the money to local law enforcement. It would raise $1.4 billion annually.

At the state level, welfare grants would be reduced 2.7%--bringing the total three-year reduction to 13%. Aid to the aged, the blind and the disabled also would be reduced by 2.7%.

Primary and secondary schools would be left with the same amount per pupil--about $4,200--as they received this year. The budget calls for higher fees for community college, University of California and California State University students.

The only major state program besides the public schools to escape cutbacks would be the prison system, which would get a 9% increase in funding.

With the budget bill on Wilson’s desk, the focus turned Tuesday to the so-called trailer bills, a comprehensive package of legislation involving taxes, welfare, local government finance and other issues.

“The trailer bills are going to be the battle royal,” Roberti said after the budget vote.

The first major trailer bill to clear both houses was the education measure. Approved Tuesday night, the measure would appropriate $4,187 per student to the schools, down about $20 per child from this year’s budget.

Although the bill allocated about 40% of the state’s general fund, it was one of the least controversial elements of the budget and passed easily. But several other parts of the leadership deal were coming under fire, mostly from Democrats.

Democrats had a certain amount of leverage because their party provided the lion’s share of the votes for the main budget bill, and it was common knowledge in the Capitol that Wilson dearly wanted to avoid another prolonged stalemate.

In return, Republicans were saying that they might not vote for the final elements of the package if the bills did not reflect the deal to which Wilson agreed. The standoff was expected to last well into the night if not for several days.

“If the governor thinks his people can threaten us that they’re going to blow up this budget deal after we provided the votes for it, they’ve got to be either smoking dope or snorting something,” said Assemblyman John Burton (D-San Francisco).

Similar trouble was brewing in the Senate, where a proposal to spend $40 million in tobacco tax revenue for prenatal care of undocumented immigrant women was encountering considerable opposition.

Democratic Sens. Tom Hayden of Santa Monica, Diane Watson of Los Angeles and Nicholas Petris of Oakland argued that diverting the money from tobacco-related research to health services would violate the intent of voter-approved Proposition 99, which raised the tobacco tax and allotted the new money to specific purposes.

“The people spoke,” Watson said. “They didn’t have that much faith in the Legislature and for us to turn around and denigrate their effort is the height of cynicism.”

Because it would supersede Proposition 99, the bill requires a four-fifths vote in both houses. That margin was clearly lacking in the Senate, so action on the measure was postponed Tuesday night.

Also in some doubt was the future of the renters’ tax credit. Although the leadership had agreed to suspend the credit for two years, Democrats sought Tuesday to link that suspension to passage of a constitutional amendment which, if passed by the voters, would reinstate the credit and protect it from being repealed.

On another front, there was discord over a part of the leadership deal that would allow counties to reduce welfare payments to single, able-bodied adults.

The original agreement would allow any county to eliminate the grants if the county could show that such welfare payments were causing significant financial distress and that basic county services could not be maintained.

But Democrats said Tuesday that they wanted the grants cut no more than 20%.

“There’s been a divergence of opinion,” said Steve Olsen, Wilson’s deputy finance director.

There also was disagreement over how the potential $1.4 billion in sales tax revenue would be divided among cities and counties and how its use would be restricted.

The leadership agreement stipulated that the money would go for law enforcement and called for a six-member panel, evenly divided between county and city officials, to divvy it up.

But county officials were trying to change the agreement as the details were being drafted into legislation. Some counties wanted to keep all the money in county coffers, but others were offering a formula that would give a limited amount to cities.

The counties were winning many converts among Democrats, but Assemblyman Richard Katz (D-Sylmar) said it was necessary to set aside some of the money for cities to give mayors and police chiefs an incentive to campaign for the sales tax measure on the November ballot.

“We need them to say, ‘Pass this sales tax, it will help pay for police,’ ” Katz said.

There also was an effort to create an urban impact aid package to help large cities and counties survive the loss of property tax revenue.

Los Angeles County stands to suffer a net loss of $273 million under the plan endorsed by the leadership, and more unless voters pass the sales tax extension. That amount would be about half of the total loss to counties statewide.

Los Angeles County lobbyists were trying to get legislators to soften the blow, but the options were limited and likely to meet resistance from legislators who represent smaller cities and rural areas.

One idea was to shift revenue from a state tax on banks to local governments because the tax law prevents cities and counties from taxing financial institutions themselves. This so-called urban impact aid would only go to cities and counties with a population of more than 500,000.

Times staff writer Dan Morain contributed to this article.

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The Highlights

The Legislature has sent a $52.1-billion state budget package to the governor. Reflecting the difficult economic times, the budget reduces general fund spending for the second year. Other key elements:

SALES TAX: Temporary half-cent sales tax extended to year’s end, with a provision to make it permanent if voters approve in November.

DEFICIT: $1.1-billion deficit rolled over, with promise to repay by end of 1994.

LOCAL GOVERNMENT: $2.6 billion in property taxes shifted from local government to the schools, which will hit Los Angeles County particularly hard.

EDUCATION: Higher education and community college funding reduced, forcing higher student fees. Kindergarten through 12th grade remains basically unchanged.

HEALTH AND WELFARE: Welfare grants and aid to aged, blind and disabled are reduced.

State Budget Watch

Nine days before the end of the fiscal year, there were these developments in Sacramento:

THE PROBLEM

* The state will end the year with a $2.7-billion deficit and faces a $9-billion gap between anticipated tax revenues and the amount needed to pay off the deficit and provide all state services at the current levels for another 12 months.

THE LEGISLATURE

* The Senate passed the budget by a vote of 27 to 11, the exact two-thirds majority necessary, at 2:43 a.m. after hours of behind-the-scenes lobbying by Gov. Pete Wilson and his allies.

* The Assembly passed a follow-up budget bill that would relieve counties of state-imposed mandates, for a saving to counties of $650 million, according to legislative analysts.

GOV. PETE WILSON

* Wilson began reviewing the budget sent to him by the Legislature.

KEY DEVELOPMENTS

* Though the main budget has passed both houses, passage of bills to enact individual components into law remained to be completed. The “trailer bills” before the two houses of the Legislature included shifting $2.6 billion in property taxes from local governments to schools, suspending the renters’ tax credit for two years, raising community college fees and rolling over a $2.7-billion deficit for 10 months.

* Assemblyman Terry B. Friedman (D-Brentwood) was crafting so-called urban aid legislation for Los Angeles and other cities to help offset heavy losses in property tax revenue contained in the new budget.

How They Voted

Here is the roll call by which the Senate approved a $52.1-billion state budget early Tuesday.

DEMOCRATS FOR: Ruben S. Ayala of Chino, Charles M. Calderon of Whittier, Wadie P. Deddeh of Bonita, Leroy Greene of Carmichael, Gary K. Hart of Santa Barbara, Teresa Hughes of Inglewood, Patrick Johnston of Stockton, Milton Marks of San Francisco, Dan McCorquodale of Modesto, Henry J. Mello of Santa Cruz, Nicholas C. Petris of Oakland, Robert Presley of Riverside, David A. Roberti of Van Nuys, Herschel Rosenthal of Los Angeles, Art Torres of Los Angeles. Total: 15.

DEMOCRATS AGAINST: Alfred E. Alquist of San Jose, Daniel E. Boatwright of Concord, Ralph C. Dills of Gardena, Tom Hayden of Santa Monica, Bill Lockyer of Hayward, Mike Thompson of St. Helena, Diane Watson of Los Angeles. Total: 7.

REPUBLICANS FOR: Marian Bergeson of Newport Beach, Robert G. Beverly of Redondo Beach, William A. Craven of Oceanside, Bill Leonard of Upland, John R. Lewis of Orange, Ken Maddy of Fresno, Becky Morgan of Los Altos, Don Rogers of Tehachapi, Newton R. Russell of Glendale, Cathie Wright of Simi Valley. Total: 10.

REPUBLICANS AGAINST: Frank Hill of Whittier, Rob Hurtt of Garden Grove, Tim Leslie of Carnelian Bay, Phil Wyman of Tehachapi. Total: 4.

INDEPENDENTS FOR: Lucy Killea of San Diego, Quentin L. Kopp of San Francisco. Total: 2.

ABSENT AND NOT VOTING: David G. Kelley (R-Hemet).

The Impact

The $52.1-billion state budget approved by the Legislature cuts funds for a number of governmental agencies and is likely to have a broad impact on services and programs. Here are highlights.

TAX INCREASES: Shoppers and businesses will continue to pay a temporary half-cent sales tax increase--originally set to expire on June 30--until the end of the year. Voters in November will decide on a constitutional amendment to make the tax permanent as a way to bail out county government. Democrats have battled long to keep the state renters’ tax credit--worth up to $120 for a low-income couple, $60 for an individual. But this year legislators agreed to suspend the credit for two years, in effect raising taxes for 4 million California households.

LOCAL GOVERNMENT: Crucial to balancing the budget is a shift of property tax revenues from local government to schools, removing some of the schools’ burden from state government. Special districts that provide such services as fire protection, transportation, water and health care were exempted. Counties and cities will get a part of the money back through the extension of the half-cent sales tax. Still, local government officials predict a wide range of cutbacks in their services.

SCHOOLS: The governor and lawmakers again agreed to shield the public schools, kindergarten through high school, from deep cuts.

HIGHER EDUCATION: Once again, students in the University of California and California State University systems can expect sizable fee increases this year, as state support for public universities is reduced.

COMMUNITY COLLEGES: Fees will increase by as much as 50% per unit this year for students at the state’s community colleges.

PRISONS: With an increasing inmate population, spending is on the rise. Additional funds will allow corrections officials to open two medium-security prisons in the final stages of construction: a 2,200-bed facility at Seely in Imperial County and a 2,400-bed penitentiary at Blythe in Riverside County.

HEALTH AND WELFARE: For the third year in a row, welfare recipients will see a reduction in grants. The deepest cut, however, will hit the elderly, the blind and the disabled. The compromise budget also cuts some health benefits to welfare recipients and other low-income individuals on Medi-Cal, the state’s health care program for the poor, but the paring was less than originally proposed by Wilson.

Counties for the first time will be able to make a case for reducing general relief, the category of aid available to poor adults who do not qualify under other programs, when counties demonstrate financial distress affecting public safety.

RESOURCES: There will be reductions in the amount spent to develop and maintain state parks, as well as less support for the regulation of pesticides and for hazardous waste cleanup.