Wilson Finds Concern, Little Cash in Washington : Capital: Governor gets sympathetic hearing from GOP leaders of Congress on his bid for relief from federal mandates. If they can’t offer money, ‘we’ll make cuts,’ he says.

Finally, after years of blaming California’s fiscal problems on federal government failures, Gov. Pete Wilson brought his complaints this week to a friendly new Congress that has promised understanding and action.

Although the new Republican leadership in the House and Senate is philosophically in sync with Wilson’s design for state and federal relationships, it has its own demand for budget cuts that probably will translate into continued financial difficulties for California.

On immigration, for example, the budget Wilson proposed in Sacramento last month contains a hole of about $800 million that he wants the federal government to cover as a reimbursement for what illegal immigration costs the state.

But when Wilson and his deputies met this week with their new friends in the GOP leadership, there was plenty of sympathy, but little cash.

“What happens if (we) don’t get it?” Wilson said at a news conference Tuesday. “We make cuts.”

Wilson is in Washington this week attending a National Governors Assn. convention, where the main topic has been welfare reform and the expected legislation that would shift substantially more authority and responsibility from the federal government to the states.

If it passes and is signed into law by President Clinton, Wilson will get much of what he has demanded from Washington on welfare--the flexibility to design a state system that he contends can be more effective at moving recipients off public assistance and saving the state money at the same time.

“The great advantage of that flexibility is that it allows us to do what we are really required by circumstance to do, and that is, instead of simply allowing caseloads to grow automatically . . . it requires that the states each year make a decision as to eligibility, as to the level of benefits,” Wilson said on the White House lawn Tuesday after a governors meeting with Clinton.

But in return for the flexibility, states are likely to get less cash to pay for welfare assistance. That means there will continue to be a need for tough budget decisions in Sacramento, where Wilson has proposed welfare cutbacks in every budget since he won office in 1990.

Welfare reform is a good example of the new landscape Wilson faces with a friendly and budget-conscious Republican leadership in Washington. There is plenty of support for getting the federal government off the backs of states. But with pressure for a federal tax cut and deficit reduction raging in Washington, there is also going to be less money available for the states.

“We are in a budget-cutting mode and (most of) the relief provided to California will be regulatory and unfunded mandates,” said Rep. Christopher Cox (R-Newport Beach), who met with Wilson on Tuesday.

The governor had a similar view after his meetings. “What we expect to get, if not the money, is (mandate) relief, and I will be satisfied . . . with the relief,” Wilson said.

His proposed budget for the 1995-96 fiscal year is contingent on almost $2 billion in federal reimbursement for illegal immigration or mandate relief that has yet to be approved by Congress.

State officials said they are optimistic that California can save more than $1 billion in next year’s budget based on expected congressional removal of federal mandates, programs required but not funded by the federal government. Almost all of the savings projected by Wilson would come from further cutbacks in programs for the poor, aged, blind, disabled and drug-addicted.

But while Wilson expects savings from removing federal mandates, the new Republican leadership is at the same time calling for more federal budget cuts that are likely to be passed on to states.

Wilson supports the balanced budget amendment, which Congress is currently considering, even though some governors at the convention were concerned that it would mean even less federal money for states. One analysis this week suggested that the amendment could cost California more than $10 billion in federal aid by 2002.

Wilson dismissed the estimates released so far, saying they are based on the faulty assumption that government policies will continue as they are. But the governor acknowledged that the amendment would probably mean less money for the state and, he said, it would require more cuts.

“Will there be some reduction in spending (on states)? I think there will,” Wilson said. “Can we live with that? I think we can.”

Federal funding decisions will play a major role in Wilson’s ability to pass his own ambitious spending plan in Sacramento this year. With an improving economy, Wilson called in his State of the State speech last month for a budget that seeks to eliminate the state’s $2-billion debt and at the same time pay for a phased-in 15% income tax cut for individuals and corporations.

The legislative analyst’s office has already concluded that the governor’s budget has little to spare and there are plenty of risks that could send it into the red--including the chance that Washington will not provide the reimbursement for illegal immigration costs that the state wants.

Last year, Wilson said the state faced a $3-billion bill for services to illegal immigrants. Of that amount, the legislative analyst’s office said, the state has received about $300 million from the federal government.

Wilson contends that protecting the border is a federal responsibility and that, therefore, state taxpayers should not be required to bear the cost of illegal immigrants.

This year, although the governor’s office said there has been no reduction in what illegal immigration costs the state, California scaled back its reimbursement request.