Brown Offers Rival Budget, Doesn’t Rely on U.S. Funds

Attacking Gov. Pete Wilson’s state spending plan as irresponsible, Treasurer Kathleen Brown on Monday proposed an alternative she said would balance the budget without relying on the federal government to reimburse California for the cost of serving illegal immigrants.

Brown, the Democratic nominee for governor, proposed a combination of welfare cuts, narrowly targeted tax increases and reductions in aid to counties in order to repay a five-year note she previously suggested as the best way to restructure the state’s ongoing debt and return the government to firm fiscal footing.

The treasurer--in her most comprehensive statement on the budget to date--ruled out her support for further spending cuts or fee increases in higher education, and echoed Wilson’s call for a 10% boost in prison funding in the coming year.

“This approach to government is one that’s based upon the notion that everyone is going to participate in helping the economic recovery of California,” Brown said.

A Wilson campaign spokesman immediately denounced Brown’s borrowing plan as illegal and her tax increases as foolish.

Brown, speaking to political reporters over breakfast in Los Angeles, also said the boos that drowned out Wilson at the Rose Bowl as he tried to address the opening ceremonies of the World Cup soccer tournament Saturday were a reflection of “divisive” tactics he has used in targeting illegal immigrants as a major source of California’s problems.

“What Pete Wilson has done is stoke the fires and the fears that people feel about the issue,” Brown said. “He takes what is a tinderbox in this state and almost lights it.”

Most of Brown’s comments, however, focused on the state budget, which is roughly $4 billion out of balance, with the start of the next fiscal year less than two weeks away. The Legislature is considering Wilson’s $57.3-billion proposed budget.

The plans offered by Brown and Wilson differ in three key respects --immigration funds, taxes and deficits.

Brown said she agrees with Wilson that the federal government should reimburse California for the cost of serving immigrants. But she said it would be irresponsible to pass a budget and a borrowing plan that rely on a huge new federal bailout in the near future.

Wilson had demanded $2.3 billion in immigration funds from Washington and proposed a budget in January that assumed the state would receive the full amount. Last week, the governor lowered his federal funds estimate for the coming year to about $760 million but said he still expected $2.8 billion the year after next.

Brown, in contrast, would expect only $300 million in federal immigration funds the first year and $600 million a year after that.

Wilson’s proposal, she said, would create “a house of cards that is bound to collapse, if not just after the November elections, shortly thereafter.”

On taxes, Wilson opposes any increase and wants to allow a personal income tax surcharge on upper-income wage earners to expire on schedule at the end of 1995.

Brown would extend the tax surcharge, and she advocates another $200 million in tax increases, which she describes as closing loopholes. Among other things, she would end tax deductions for lobbying expenses, country club dues and some moving costs. She would eliminate the sales tax exemption for printed advertisement material, or, in her words, “junk mail.”

Brown also wants to withhold taxes from independent contractors the same way they are taken from wage earners, which experts believe would cut down on cheating.

Both Wilson and Brown would borrow to help retire the state’s ongoing deficit, but in different ways. Wilson would borrow $1 billion and pay off the loan within two years, relying on the increased federal funds he is anticipating to help the state pay the tab.

Brown would borrow as much as $3 billion, but pay it off over five years. Instead of banking on the federal funds, she has proposed long-term cuts and revenue increases that would bring the budget into balance even if Washington fails to come through.

But Wilson maintains that any borrowing not repaid within two years would violate a state constitutional provision against incurring bonded indebtedness without a vote of the people.

“Kathleen Brown wants to raise taxes, break the law by selling bonds without voter approval, run a five-year deficit and, for good measure, let the federal government off the hook for the illegal immigration money they owe California,” said Dan Schnur, Wilson’s campaign spokesman. “We disagree.”

But behind the rhetorical clashes, Brown’s first detailed budget proposal illustrates the few options left in Sacramento, as she endorsed a number of Wilson’s proposals even as she tries to separate herself from his goals.

Brown, for example, criticized Wilson for enacting budgets that hurt the poor and said she would “spread the pain.” But she backed his proposals to eliminate the renters tax credit and cut county health programs by $285 million. She suggested a 5% reduction in welfare grants--less severe than Wilson’s proposal but deeper than Democrats in the Legislature have so far offered to accept.

On local government, Brown said she opposes any “major cuts” in city and county budgets, which have been hit hard by Wilson’s recent spending plans. But back-up material provided by her campaign said she endorsed the governor’s call for taking $500 million in local government property tax revenue in the coming year.