Rival Budget Seeks to Cut Prison Funds : Spending: Joint Democratic committee accepts much of Wilson proposal, but rejects cuts in welfare and Medi-Cal and seeks to extend tax surcharge for the wealthy.

Offering an alternative to Gov. Pete Wilson’s proposed reductions in health and welfare programs, legislative Democrats circulated a plan Thursday that would trim prison spending and extend a temporary income tax surcharge for the state’s wealthiest residents.

The plan, prepared by members of a Senate-Assembly conference committee considering the governor’s $57.3-billion budget, accepts much of what Wilson proposed in a revised spending plan he released Monday.

But the legislative version rejects Wilson’s call for nearly $700 million in cuts in Medi-Cal, the subsidized health care program for the poor, and in Aid to Families With Dependent Children, the state’s biggest welfare program.

In place of those cuts, the Democrats offered a list of more than 30 spending reductions, cost shifts, deferrals and tax increases to balance the budget over a two-year period.

Driving the Democrats’ plan is their desire to avoid Wilson’s proposal to cut welfare grants 10% immediately and another 15% after six months. The Democrats also oppose Wilson’s plan to eliminate several Medi-Cal services--including dental care--that the federal government does not require the state to offer.

Assemblyman John Vasconcellos, the Santa Clara Democrat who is chairman of the Ways and Means Committee, said the welfare cuts would “cost us more in the long run. You starve babies (and) you end up with dysfunctional students and an ill-prepared work force. I find that to be pretty stupid.”

But to balance the budget, the Democrats have to find cuts or revenue equivalent to the items they delete from Wilson’s plan. Most of what they have proposed falls into criminal justice spending or taxation.

Under Wilson’s proposed budget, spending on the Youth and Adult Correctional Agency would rise $355 million, or 10.5%. The Democratic plan would shave that increase to about $206 million, or 6%.

Several cuts proposed by Democrats are likely to be rejected out of hand by Wilson because they would mean more leniency for convicted criminals.

The Democrats would end parole supervision for nonviolent inmates, except those convicted of selling drugs. They also propose jail time instead of prison terms for those convicted of petty theft unless they have been convicted of a violent crime. Also, the Democrats would require parole instead of prison for nonviolent inmates who would serve less than six months behind bars.

Some of the other ideas on the Democrats’ list might be considered by Wilson.

The Democrats would save nearly $50 million with cuts in prison administration.

And they would shave another $13 million by ending the practice of sentencing certain young adults to the California Youth Authority instead of state prison. The youth camps are more expensive because they have more extensive rehabilitation programs than prisons.

The Democratic plan also hits county criminal justice programs hard. It would end a $32-million annual subsidy to county probation camps, $19 million of which goes to Los Angeles County. And it would charge counties on a sliding scale for juvenile criminals sent to the California Youth Authority.

The state still would accept murderers, rapists and other hard-core young criminals from counties with only a nominal charge. But the fees would rise as the severity of the conviction declined. The idea is to give counties an incentive to keep their less serious young criminals in local camps rather than sending them to do time in the more expensive CYA cells.

The other major difference between Wilson’s plan and the Democratic version is on taxes. Wilson allows for no new taxes, proposes two business tax breaks and is silent on what to do about the upper income surcharge, which sets the permanent 9.3% top bracket at 10% or 11% depending on family income.

The Democrats want to extend those top rates indefinitely, which apply to families with taxable incomes above $300,000 and are due to expire at the end of 1995. This would raise $310 million for the state in the 1995-96 fiscal year.

The Democrats also would wipe out the business tax breaks Wilson is supporting--including one intended to keep Taco Bell’s headquarters in Orange County--and restrict a $64 state tax credit that goes to people 65 and older. Under their version it would go only to lower and middle-income taxpayers.

Republicans reacted cautiously to the plan.

Assembly Republican Leader Jim Brulte of Rancho Cucamonga said Republicans will continue to press for cuts in welfare. He noted that President Clinton this week proposed a plan that would move recipients off the rolls after two years, a notion that he said is similar to what Wilson has proposed.

“I don’t think it is unrealistic to suggest that in this down-budget year we’re going to continue to reform welfare,” Brulte said. “If that kind of welfare reform concept is good enough for Bill Clinton it ought to be good enough for Assembly Democrats.”

The Democratic plan, which was prepared by the party’s leadership, may also run into trouble with rank-and-file members. Los Angeles County is hit hard by the proposal and is expected to try to marshal its delegation to oppose it.

“These cuts are a real setback,” said Sally Reed, Los Angeles County’s chief administrative officer. “They are trying to balance the budget on Los Angeles’ back. Los Angeles is the engine of the California economy. This is not good business and it is not fair to this community.”

Times staff writer Fred Muir in Los Angeles also contributed to this story.

Democratic Alternative

Democratic lawmakers Thursday proposed an alternative to Gov. Pete Wilson’s budget, which calls for deep cuts in health and welfare programs for the poor. The most controversial part of the Democratic proposal probably will be its proposed reductions in spending on criminal justice programs. Here are some of the proposals and the possible savings:

* A 10% cut in administration at Department of Corrections and 5% at the California Youth Authority.

Savings: $43.3 million

* Elimination of program administrators in state prisons.

Savings: $8.5 million

* A 3% unallocated reduction at Department of Corrections and 2% at Youth Authority.

Savings: $15 million

* An end to parole supervision for nonviolent inmates unless their conviction was for sale of drugs.

Savings: $45 million

* Elimination of prison terms for petty theft with a nonviolent prior conviction.

Savings: $14.2 million

* Intensive parole supervision instead of prison for nonviolent inmates with less than six-month prison terms.

Savings: $5.5 million