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Rosy Outlook Colors Wilson’s Inauguration

TIMES STAFF WRITER

For Gov. Pete Wilson, the economic comeback for the Golden State arrives symbolically this week, with the start of a new year potentially so prosperous that he may offer Californians a tax cut.

To celebrate both the projected economic turnaround and his own political rebound, the Republican governor will throw a three-day inauguration party designed to advance his campaign theme, “California is coming back,” to “California is back.”

While the governor celebrates, the legislative arm of state government will reconvene Wednesday in an extraordinary situation. The Assembly is without leadership or operating rules because of a standoff between Democrats trying to retain veteran Willie Brown and Republicans seeking new blood in GOP leader Jim Brulte.

Until its members elect a Speaker, the Assembly can engage in no business except to vote on a Speaker and to adjourn, a predicament that heading into the new year showed no sign of speedy resolution.

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Wilson, meanwhile, will take the oath of office twice this week. The first ceremony will be a private one today to meet a state constitutional requirement that governors be sworn in on the first Monday after Jan. 1. It is being held privately in the Ronald Reagan Cabinet Room because this year, the day is a national holiday.

To the theme devised by his inaugural committee, “California: Forging America’s Future,” Wilson will repeat the oath-taking Saturday at a traditional public inauguration on the west steps of the Capitol.

Wilson will deliver his annual State of the State speech to the Legislature on Jan. 9 and propose his state budget on Jan. 10. Aides have hinted he may recommend a politically popular $9.1-billion income tax cut.

Other issues that Wilson and legislators must face this year range from deciding if and how to help Orange County return to fiscal health to further cutting welfare, constructing more prisons and intensifying the war against crime with new penalties.

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But during inauguration week, Wilson, who finds himself the topic of speculation as a prospect for the GOP nomination for President in 1996, can be expected to trumpet the theme of the state resuming its place of pride on the national stage.

“We are saying California is back. The economy is getting better. This is a sort of a renewal of the state--land of dreams, hopes, go West young man, surfboards to computer boards,” said inauguration spokesperson Beth Miller.

Singer Natalie Cole will be the headliner Friday night at a $125-per-person entertainment gala at Sacramento’s Arco Arena. Television’s Mary Hart again will be the mistress of ceremonies, as she was at Wilson’s first inauguration in 1991.

The governor will give his inaugural address on Saturday after taking the oath of office from California Chief Justice Malcolm Lucas.

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Wilson will attend his inaugural ball at the Cal Expo fairgrounds Saturday night and participate in a prayer breakfast Sunday.

Except for a tour of the governor’s office Friday and his inaugural address the next day, admission to the festivities will be restricted to those with invitations.

The estimated $2-million-plus inauguration celebration, a somewhat scaled-down affair from Wilson’s 1991 parties, will involve no public funds, Miller said. She said it will be financed by ticket sales of $125 for each event and underwritten by campaign contributors and corporations donating $25,000 each.

Wilson, who only a few months ago was ranked as the most unpopular California governor of the past half century, staged a remarkable turnaround to win reelection in November over Democrat Kathleen Brown. A key campaign theme stressed that California was emerging from a deep recession to a brighter day when it would soon recapture its economic magic.

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A panel of private economists appointed by Wilson declared two weeks ago that the recession had bottomed out and recovery would match or outpace that of the nation as a whole. The economists recommended a $9.1-billion cut in personal and business income taxes during the next three years as a “dividend” to taxpayers and as a stimulus to more economic expansion.

Wilson has welcomed the idea, and in news media interviews last week outlined his own reasons for believing a tax cut will work to the state’s advantage. California, he said, “is a very high-tax state” compared to its “low-tax” western neighbors. “And there is no question that that has a real bearing on our ability to compete for investment that creates jobs. . . .”

Asked if he would propose tax relief next week in his State of the State address, Wilson said, “I am giving it very careful consideration. You do have to be able to make sense of it on economic grounds, but I think that it does make sense.”

Revenues lost through lowered taxes, he said, “presumably will be offset by new revenues that occur” as the economy recovers and continues improving.

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How an income tax cut would play out in the Legislature is uncertain. As Wilson prepares the new state budget, he faces a revenue gap that by some estimates exceeds $2 billion, although the governor has declared that the state’s “accumulated deficit” has been erased, leaving “a cash flow problem . . . rather than a real budget problem.”

State officials, including Wilson, have discouraged bankrupt Orange County from seeking a financial bailout because state government hasn’t the money to spare.

However, Senate leader Bill Lockyer (D-Hayward) has left the door ajar for some form of assistance if bankruptcy swallows the pensions of the county’s retired public employees and threatens the pay of peace officers, firefighters and teachers.

“Concern for those individuals is still a primary consideration,” Lockyer said. He said it was uncertain what state actions, if any, could be made to return fiscal stability to Orange County.

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Legislation already has been proposed in both houses aimed at making certain that the No. 1 task of local treasurers in California is safeguarding public funds, not gambling those funds on risky investments.

Lockyer said he intends to introduce legislation that would restrict political contributions from private investment managers to treasurers and county supervisors who are charged with investing taxpayer money. “They should not depend on people they do business with for political contributions,” he said.

But the prospect of a high performance year for the Legislature is jeopardized by an unprecedented fight between Democrat Brown and Republican Brulte for the Assembly’s top post.

The two are tied 40-40 for speakership votes and have spent the past month lobbying Assembly members of the other’s party to bolt ranks and provide the vote needed to elect a Speaker, considered the second most powerful official in California behind the governor.

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Republican organizations have either threatened, or begun, recall elections against four Assembly Democrats they believe are vulnerable. Ousting Democrats in costly special elections theoretically would give Republicans the votes they need to elect Brulte.

The GOP also wants to recall Assemblyman Paul Horcher of Diamond Bar, a former Republican who voted for Brown on Dec. 5 and denied the speakership to Brulte.

Both Brown and Brulte have talked of sharing power, but Brulte has warned that the stalemate may persist through March.

Brulte said Republicans can be expected to pursue legislation that would further reduce welfare grants as an incentive for recipient mothers and fathers to get jobs quicker and to seek passage of auto insurance legislation that would offer limited liability coverage at a cost more affordable to low-income Californians.

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In the Senate, both Democrats and Republicans foresee the senior chamber shifting from its traditional role as the slower paced, more reflective of the two houses to a more aggressive public policy organization.

Lockyer said Democrats will press hard for improvements in education because a trained and educated work force is “essential” to restoring the California economy. He said Democrats also will propose crime prevention alternatives to building more costly prisons.

“Virtually every state prisoner has problems with drugs, literacy and mental health,” Lockyer said. “A fresh look at an expansion of effective programs in those areas could reduce the number of crimes committed.”

Republican leader Ken Maddy of Fresno and GOP caucus chairman Bill Leonard of Big Bear said Republicans can be expected to offer workers’ compensation insurance legislation and a “tax restructuring” that would benefit small businesses.

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