State Budget Deal in Works, Negotiators Say

With the budget deadlock showing tentative signs of ending, the state Senate on Saturday approved a controversial diversion of $64 million from widely acclaimed anti-tobacco programs to general health care programs for the poor.

In addition, a Senate committee also agreed Saturday to place a $2-billion bond for earthquake repairs and seismic retrofitting on the March ballot. The measures, as well as others in the works, are aimed at building support among lawmakers for Gov. Pete Wilson’s $56-billion spending plan for the fiscal year that began July 1.

And as California enters the third week of the 1995-96 fiscal year without a budget, Wilson and several lawmakers said a deal is coming together.

“We have made very good progress,” Wilson said Saturday afternoon after meeting with legislative leaders. Democratic and Republican leaders will outline the proposal to their caucuses Monday, “and attempt to secure votes for the proposal, which is a way to get this done,” the governor said.

A budget vote could come by week’s end, said Assembly GOP Leader Jim Brulte, one of the main negotiators. Details are sketchy because Wilson and legislative leaders who work on the budget are meeting behind closed doors. But some points of compromise have emerged:

* The Wilson Administration has agreed to Democratic demands that state college and university tuition not be raised, and has agreed to boost higher education spending another $34 million from general revenues, Brulte said.

* The Wilson Administration is close to agreement on increasing the $26-billion expenditure on schools, including giving schools much of an extra and unexpected $340 million in revenue from tax receipts.

* Wilson and lawmakers also are drawing closer to an accord on welfare cuts. The governor has dropped his plan to shift the financial responsibility for welfare families to the counties. Instead, he is pushing for a formula that would base welfare payments on a region’s cost of living.

Still, some Democrats say recipients cannot survive on the grants, which will drop from $607 a month for a mother with two children to $594 in the five counties with the highest cost of living, including Orange and Ventura, and $576 in mid-range counties, including Los Angeles.

Assemblyman John Vasconcellos (D-Santa Clara), a critic of welfare cuts, called the proposal “the most abominable thing Wilson has done in his life--and that is saying a lot.”

As the Central Valley heat hit triple digits, and the start of the Legislature’s summer vacation came and went Friday, some lawmakers were getting testy, particularly because they will not receive their tax-free $109-a-day expense checks until a budget is in place.

On Friday, after growing tired of complaints about the unusual Saturday session, an irritated Senate President Pro Tem Bill Lockyer told senators to expect to be in session every day until a budget is in place.

On Saturday, Lockyer aimed a blunt message at the more liberal members of his own Democratic caucus: “We are not going to get new taxes. It’s not going to happen. Get used to it.”

Despite signs that a budget deal is coming together, politics in the Capitol are so dicey that any agreement could fall apart. The budget gap is relatively small--less than $1 billion in the $56-billion plan. But a strange political mix complicates this summer’s budget negotiations.

First, there is the fractious Assembly. Republican Speaker Doris Allen survived yet another challenge to her leadership from the GOP Friday night, but verbal sniping at her goes on daily. Then there are Los Angeles County’s financial troubles, questions about abortion funding and the political ambitions of key negotiators.

Wilson wants a budget so he can leave Sacramento and run for President. His $7.6-billion tax cut died in the Senate last week. But the Republican governor still needs a tight and, more or less, balanced budget so he can campaign as a fiscal conservative.

That is why Democrats know cuts to welfare are coming. But Assembly Democratic Leader Willie Brown has a campaign to worry about, the one for mayor of San Francisco. Back home, Roberta Achtenberg, who quit the Clinton Administration to return to San Francisco to run for mayor, is ready to attack him from the political left.

“It is exceedingly important that there be no compromise on issues like the level of welfare funding,” Achtenberg said Saturday. “If that happens, San Franciscans will be profoundly harmed, and we will be obligated to reassess whether the Speaker emeritus is indeed as powerful as he professes to be.”

In a budget fight, every vote is key. Any one lawmaker can forge alliances, which can make it hard for leaders to obtain the needed two-thirds vote in the Legislature--54 in the Assembly and 27 in the Senate.

Abortion funding has re-emerged as an issue. In the Senate, Republican Ray Haynes of Riverside counts 10 lawmakers who will not vote for the budget with $42 million in it for Medi-Cal abortions.

In the Assembly, freshman Republican Bruce Thompson of Fallbrook says he counts 18 solid anti-abortion votes.

Los Angeles-area lawmakers are making a play to aid financially battered Los Angeles County. They want to give the county the authority to raise or impose new taxes and to stop state-mandated spending on a variety of programs.

“Los Angeles County is a big fly in the ointment,” Assemblyman Richard Katz (D-Sylmar) said.

As for the bond measure, the state Senate is expected to approve Monday a plan that places a $2-billion bond measure on the March ballot to pay for earthquake repairs on Southern California highways and reinforcement of bridges in the San Francisco Bay Area, Katz said.

If passed, it would free $1.4 billion, now earmarked for quake retrofitting, for use on new freeway projects, 60% of which would be in Southern California.

But there are opponents to the bond measure, among them state Sen. Tom Hayden (D-Santa Monica). Hayden says passage of the bond measure could give the troubled Metropolitan Transportation Authority as much as $400 million. Because of that, said Hayden, Los Angeles voters may vote down the measure because it “will be perceived as a back-door way of bailing out the MTA.”

Hayden, along with state Sen. Diane Watson (D-Los Angeles), also tried to kill another part of the budget deal--the shift of $64 million from anti-tobacco education and research to health care for indigents, including pregnant women and children. The money is raised by a 25-cent-per-pack tax on cigarettes imposed by the 1988 initiative Proposition 99.

But the redirection of funds has backing from Wilson, almost all Republicans and most Democrats, and is supported by the powerful California Medical Assn. The Senate approved it Saturday on a 32-6 vote, sending the measure to Wilson’s desk.

“I do not know how to bring you a budget unless we agree to this,” Lockyer told the Senate, adding that welfare cuts would have to be deeper if tobacco tax money were not shifted to pay for indigent health care.

In an odd twist, anti-tobacco activists, normally allied with doctors, not only parted with the medical association, but accused the doctors’ lobby of doing the bidding of the tobacco industry.

Since the passage of Proposition 99, the tobacco industry has seen tobacco use decline in California to the point where less than 20% of residents smoke--a drop researchers attribute to the intense anti-tobacco efforts funded by the initiative.

Still, Hayden said he is not a firm no vote on the budget. “The student fee issue is so big that it may counterbalance the bad,” he said. He paused, then added, “I still feel the tilt is toward ‘no.’ ”