Wilson Makes Final Deletions, Then Signs $57.5-Billion State Budget

Gov. Pete Wilson on Friday signed a trimmed-back but still debt-burdened state budget for the fiscal year that began July 1, calling the $57.5-billion spending plan the product of “an intelligent set of compromises.”

Before signing the budget, the Republican governor used his line-item veto to delete $22 million in spending approved by the Legislature. He set aside another $58 million that he said he would restore if lawmakers agreed to allocate it the way he wants it spent.

Among other things, Wilson vetoed $26 million from the state highway construction fund that the Legislature had earmarked for earthquake retrofitting projects. The governor said he wants to spend the money instead on administrative costs at Caltrans, the state highway agency.

The governor also deleted $24 million the Legislature had allocated for a controversial student testing program, formerly known as the California Learning Assessment System, or CLAS. Wilson said he will restore the money if the Legislature passes a bill to restructure the examination.

Wilson backed down from a confrontation with the Legislature over prenatal care for illegal immigrants. The governor wanted to eliminate the program but lawmakers refused. Wilson had threatened to veto money elsewhere in the budget in order to free $50 million for the prenatal program.

Finance Director Russell Gould said Wilson did not need to take any action because the state got an unexpected $72 million from the federal government Tuesday to settle a long-pending claim.

The overall budget, Wilson said, protects his two highest priorities, schools and state prisons, even as it reduces aid to families on welfare and to the aged, blind and disabled.

The state’s general fund, which pays for most health, education and welfare programs, as well as the prisons, parks and the state bureaucracy, will grow 4.2% in the coming year, from $39.3 billion to $40.9 billion, according to the Department of Finance.

The budget envisions general fund spending climbing another 8.4% in the 1995-96 fiscal year, which begins a year from now.

Gould insisted that the $26 million vetoed from the highway account will not have any effect on efforts to strengthen the state’s bridges against earthquakes. In fact, Gould said, if that money is not restored to the administrative budget, planning and designing for the retrofitting could be slowed.

But Assemblyman Richard Katz (D-Sylmar), chairman of the Transportation Committee, said Wilson’s proposed timeline for fixing the freeways is too lax. He said Caltrans has layers of administrative fat and argued that it makes sense to shift money from planning to construction.

“They are taking money from the seismic retrofit program to protect upper-level bureaucrats,” Katz said.

The assemblyman had insisted that the Legislature exempt planners and designers from its administrative reduction.

Wilson deleted about $500,000 that the Legislature set aside to hire an independent expert to advise the Department of Motor Vehicles on how to get a failed $44-million computer project on track.

The governor complained that the Legislature’s intent was to take control of the computer project from the executive branch.

“I am deleting this language because it improperly limits and interferes with the authority of the executive branch to manage the department and constitutes an infringement on the separation of powers,” Wilson wrote in his veto message.

But overall, the amount vetoed by the governor was tiny compared to the nearly $58 billion the state will spend from all funds in the coming year. Most of his disagreements with lawmakers were ironed out over several weeks of negotiations before the Legislature passed the budget.

The most significant of these agreements was an unprecedented standby measure that could trigger automatic budget reductions if the state’s fiscal condition worsens over the next two years.

That measure was needed to reassure the financial markets that the state will be able to repay about $7 billion in loans it needs to keep its programs operating.

Lawmakers passed the bill after banks expressed skepticism in Wilson’s ability to obtain $2.8 billion in new reimbursement from the federal government for the state’s cost of serving illegal immigrants.

State Controller Gray Davis, who will oversee the first $4 billion in borrowing next week, said the budget’s reliance on that hoped-for federal money sets a dangerous precedent.

“I am very concerned about California heading down the same slippery slope toward bankruptcy that New York did in the late 1970s,” Davis said in an interview.

But Wilson said the budget is a responsible one.

“It reflects what is possible,” he said.

If the state were to balance its budget without relying on new federal money for immigration, Wilson added, it would be letting the federal government ignore its responsibility.