Wilson Proposes Speedup of Deep Cuts in Welfare : Budget: In his revised plan, the governor stands firm on proposals for a 15% tax cut and the first increase in four years for education. The strategy may pit advocates for the poor and for the schools against each other.

Gov. Pete Wilson, in a revision to his state budget, proposed accelerating deep cuts to welfare on Monday, while continuing to push for a $7.6-billion tax cut and an increase for public schools--education’s first increase in four years.

Wilson, still recovering from throat surgery, did not appear at a news conference at which his revised budget for the fiscal year beginning July 1 was released. But Finance Director Russell Gould said the updated $56-billion budget reflects a continued belief that California’s economy is improving.

Wilson remains firm in his commitment to offer a 15% tax cut--even though his plan has faltered in both houses of the Legislature. Quoting a Wilson statement, Gould said that if the Legislature fails to enact the tax cut, “be certain that the voters will approve it at the polls.”

“We’ve got 32 other states that are pursuing tax cuts. We need to be able to compete with them,” Gould said. “The rest of the world isn’t standing still. You’ve got to show that you’re willing to create an environment that can produce jobs long-term.”

With the release of the updated budget, the outline of the governor’s strategy for winning legislative approval of the spending plan emerged. In many ways, it pits proponents of education against lawmakers seeking to protect welfare payments.

“It becomes a fundamental question of choice,” Gould said, noting that although California ranks low in per-student spending, individual welfare payments are among the highest in the nation. “We would rather invest it in education, public safety and prevention programs. We think it is a very clear choice.”

The governor announced plans to speed cuts of 15% in benefits to families on welfare, starting the reductions in September, for a saving of $101 million. When he released his budget in January, Wilson proposed making the cuts starting next March.

At the same time, the budget offers an increase of $1.2 billion for kindergarten to 12th-grade schools, providing $4,334 per student. The revised budget shows an increase of 2.7% over current spending, up from the 2.2% proposed in January. Spending on schools through grade 12 schools would be $16.5 billion, the largest part of the $41.8-billion state general fund. The general fund is the part of the budget funded primarily by income and sales taxes and pays for most state services.

Supt. of Public Instruction Delaine Eastin said she was pleased with the 2.7% increase in student spending but criticized the governor for “budget maneuvering” that will result in schools receiving $700 million less of an increase than she contends is rightfully due to education.

The document released Monday represents the annual revision of the budget after April tax collections and other economic indicators of what the state can expect in revenue in the coming year.

Spending for the 1995-96 budget year would be $1.5 billion less than it was in Wilson’s first year in office. In the revised budget, the state reserve falls from a small $92 million to $58 million.

Gould said that the state will need to borrow $2 billion in the coming year to meet short-term cash flow needs but said the budget reflects no deficit.

The Legislative Analyst’s Office, however, recently placed the total budget gap at $2.8 billion. The gap is the shortfall in this year’s budget plus the projected shortfall between revenue and spending next year.

Wilson, continuing his campaign for more money from Washington to pay for state services to illegal immigrants and refugees, estimated that the federal government will pay $515 million for the health care and imprisonment of illegal immigrants, rather than the $732 million he expected when he issued his budget in January.

The Legislature has been holding hearings on the budget for two months. The sessions will take on more urgency as the Legislature’s June 15 constitutional deadline for passing a budget approaches.

Complicating the process, the Assembly is headed for renewed fighting over its leadership as early as June 8--a week before the Legislature is supposed to approve a budget.

By then, the Republicans are expected to have a majority of seats in the 80-member Assembly and are planning an attempt to unseat Speaker Willie Brown (D-San Francisco).

In past years, Brown pushed Assembly Democrats to vote for budgets he helped broker. The budget must be approved by a two-thirds majority in each house. Now that Brown is a lame duck and Republicans are on the verge of seizing control of the lower house, the 39 Assembly Democrats will be less willing to vote as a bloc to support the Republican governor’s budget.

“I feel much more freedom to say, ‘Let someone else vote for a phony budget,’ ” said Assemblyman Louis Caldera (D-Los Angeles), who chairs one of the budget subcommittees and voted for budgets in each of his first two years in the Assembly.

Despite the coming speakership battle, Assembly Republican Leader Jim Brulte of Rancho Cucamonga said he expects the Legislature to approve a budget on time, and he predicted that the battle will come down to cuts from either education or welfare.

“We’re not going to raise taxes, so we’re either going to cut health and welfare or we’re going to cut education,” Brulte said. “Republicans don’t want to cut education. We’d rather take the cuts out of health and welfare.

“Ultimately,” Brulte added, “the Democrat[s] . . . will decide that they don’t want to run around talking about raising taxes. So the battle will be between the health-and-welfare Democrats and the education Democrats. We’ll just hold their coats, let them beat each other up, and we’ll bet that the education Democrats will win.”

In the Assembly, a committee turned down Wilson’s tax cut plan. Wilson withdrew the proposal from a Senate committee when it became clear it was headed for defeat. Critics charge that Wilson is pushing the $7.6-billion tax cut as part of his presidential campaign and that it would benefit mainly the wealthy. Wilson raised taxes by more than $7 billion after he took office in 1991 to close a huge budget deficit.

Lawmakers in both houses were critical of Wilson’s plan to shift responsibilities for welfare to counties and give them money to cover the costs. In the original budget plan, the costs fell hardest on GOP districts, including one represented by Brulte, while many Democratic strongholds fared well.