Wilson Signs State Budget That Reflects His Influence : Finance: Document includes rise in education spending and welfare cuts. Governor also takes jabs at Brown, Allen.

Pete Wilson signed his fifth state budget as governor of California on Thursday, clearing his schedule so he can return to the presidential campaign trail today and ending a week of bitter fights with legislators by taking revenge on some of their home districts.

Wilson took parting shots Thursday at Democratic Assembly Leader Willie Brown and Republican Speaker Doris Allen--both of whom he blamed for the hostile budget debates--by using his line-item veto to ax from hometown projects about $400,000 they had expected.

Despite the bad feelings, the $57.5-billion budget signed by the governor 34 days past its deadline probably reflects more of Wilson’s influence than any other individual force in the state Capitol.

For the fifth straight year, he persuaded Democrats to support a cut in welfare payments. Unlike in past years, the governor succeeded this time even though the state’s economy is improving and the cuts were not balanced against fiscal calamity. Wilson also increased spending for prisons once again. Overall, for the fourth year in a row, the budget holds government spending below revenues.

But the point Wilson chose to highlight at his signing ceremony Thursday was the one forced on him by the Democratic majority in the state Senate. On Sunday, Democrats held out their support for the budget until the governor agreed to increase spending for public schools and to cancel a proposed fee increase for colleges and universities.

“A budget, more clearly than any speech or position paper, is a statement of priorities,” Wilson said during a ceremony in which he signed the education spending plan. “If California is to compete and win, we have to give top priority to preparing our children.”

Wilson’s relations with education leaders have been marked by more conflict than celebration during his tenure. Even with the latest increase, California ranks 40th in the nation in per-pupil spending--up from 42nd. Test scores released in April show that a majority of the state’s fourth-, eighth-, and 10th-graders still fall well short of minimal standards for reading, writing and arithmetic.

So it was a rare moment Thursday when education leaders representing California’s administrators, teachers and school boards stood at a podium beside Wilson and offered him their thanks. It also underscored the substantial benefit that the 1995-96 state budget contains for education.

It was the first time in a decade that the state budget has not included a fee increase for colleges and universities. And it was the first time in five years that elementary and secondary schools have received a cost-of-living hike.

“As I was coming in on an airplane, I was thinking: How long has it been since the California Teachers Assn. has been invited to a bill signing?” said Lois Tinson, CTA president. “I could not remember. This is one of the best budgets we have had in recent years. I want to personally say thank you [governor], because you stepped in when it was time to step in.”

Last week, the CTA agreed to an out-of-court settlement with the Wilson Administration, ending a 1992 lawsuit that was so potentially damaging to the state’s finances that Wall Street analysts cited it as one of California’s major blemishes. The settlement generated the bulk of about $1 billion that was added to the education budget proposed by Wilson in January.

Thursday’s budget was made possible only after Assembly leaders literally locked their members in the Capitol until they reached agreement with a 56-19 vote about 3:30 a.m. Wednesday. Even then, passage took significant concessions from the governor as well as Assembly Democrats and Republicans.

The upshot of the late-night resolution is that many of the issues that snagged budget negotiators were put off until later this year. When the Assembly reconvenes later this month, it will pick up where it left off, still wrangling over a Democratic bill to help financially ailing Los Angeles and Orange counties as well as a Wilson-backed plan to cut prenatal care for illegal immigrants.

The acrimonious relations are also likely to continue, especially after Wilson wreaked revenge on his adversaries with a budget blue pencil Thursday.

Wilson carved $75,000 from an avian center at the San Francisco Zoo and another $50,000 from a midnight basketball program, both in Democratic Leader Brown’s district. In Orange County, he slashed $285,000 from a Seal Beach erosion project in the district of Republican Speaker Allen, who accused Wilson this week of doing too much campaigning and not enough governing.

Wilson cut projects ranging from a $20,000 swimming pool in Democrat Mike Machado’s hometown of Linden to two parks in San Diego Democrats’ districts, to a Democrat-proposed $597,000 purchase of new equipment at East Los Angeles College. A few Republicans also lost projects, but they were legislators who held out against the budget, or irritated Wilson along the way.

“It’s a retribution, of course,” Assemblyman Louis Caldera (D-Los Angeles) said, citing Wilson’s cut of $100,000 for parkland purchase in Los Angeles. “People know that is one of the possibilities if you vote against the budget. But if the governor thinks you’re going to sell out your vote for a $100,000 park, that’s ridiculous.”

Unlike Caldera, Assemblyman Richard Katz (D-Sylmar) voted for the budget. But he also was among the leading advocates of more help for Los Angeles County--and Wilson axed $500,000 that was earmarked for a treatment center for assault and rape victims in the San Fernando Valley.

“My assumption is he is retaliating against L.A. legislators, because we didn’t roll over on the budget,” Katz said.

The negotiations over the spending plan also took some toll on Wilson, forcing his presidential strategists to sit tight in the campaign headquarters one block from the Capitol and anxiously await the return of their candidate.

The budget talks became serious just as Wilson’s campaign was picking up speed after it gained substantial national attention when he dramatically persuaded the University of California Board of Regents on July 20 to drop race as a factor in hiring and admissions.

Last weekend, Wilson was forced to cancel trips to Arizona, Vermont, Florida and Georgia. This weekend, his schedule in the Northeast was scaled back because campaign officials were uncertain of the governor’s availability. Still, he will leave today for a five-day trip scheduled to include Maine, Washington, Philadelphia, Iowa and Colorado.

The state budget that Wilson signed includes a number of issues that relate to the themes of his presidential campaign.

He has appealed to voters as a governor who takes action instead of just talking about issues, as he says his presidential rivals in Congress do. He has also tied his campaign to five major issues, many of which are reflected in the budget: tight government spending, welfare reform, crime, illegal immigration and affirmative action.

Welfare payments are cut 4.9% in the new budget, adding to a reduction of 14% that has been implemented since Wilson took office in 1991. Under the new budget, which still requires a federal waiver to begin its welfare cuts, aid recipients in lower-rent parts of the state would see their payments cut an additional 4.9% for a total of 9.6%.

On spending, Wilson’s presidential campaign has portrayed the governor as a fiscal conservative by boasting to audiences that California’s budget is lower than it was in his first year as governor. General fund expenditures in this latest budget are about $3 billion below those in the 1991-92 budget.

Much of the reduction was forced on the government by California’s recession and the drastic plunge in state revenues. The drop also reflects five years of sizable cuts in social costs and minimal spending on education and other programs.

For the first time in four years, the new budget also forecasts the elimination of the state’s debt. Since 1991, California has transferred red ink between budget years. This year, about $1 billion in debt was rolled into the 1995-96 budget. State finance officials said the new budget seeks to pay off that remaining amount by next spring. Politically, that could steal a potential attack from Wilson’s presidential opponents.

Despite the successes for Wilson in the budget, campaign analysts have largely considered the document a bigger opportunity for problems than for political gains. So instead of taking the budget on the road, Wilson’s campaign is probably happiest just to be back on the road.

Even with the significant boost for education in California, political observers said it is not likely that Wilson will use that issue on the campaign trail because it raises the opportunity for his opponents to point to the state’s poor test scores and poor funding levels.

“Education is not a cutting issue in Republican primaries,” said GOP strategist Sal Russo. “And I don’t think there are many bragging rights in there for anybody in California.”

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WHERE THE MONEY GOES

Some programs gained, some lost and some stayed even in the scramble for revenue dollars that resulted in the 1995-96 state budget. Some of the highlights of the $57.5-billion spending plan signed into law by Gov. Pete Wilson:

Taxes: For most Californians, the state income tax rate remains unchanged--no increase and no cut, as earlier proposed by Wilson. But, as a result of earlier agreements, individuals with taxable incomes above $100,000 now paying 10% and individuals above $200,000 paying 11% will be taxed at 9.3%.

Schools: Kindergarten-through-12th-grade schools receive a $1-billion boost--including the first full cost-of-living increase in five years. Per-student spending rises to $4,435 a year. That’s $201 more than the current level but still leaves the state 40th in the nation in per-student investment, up from 42nd.

Colleges: For the first time in a decade, students at UC and CSU campuses will not be hit with fee increases. UC fees hold steady at around $4,000 a year--assuming UC regents go along--and $1,740 at CSU campuses. Community college fees for residents stay at 1993 levels, about $390 a year--”lowest in the nation,” according to Wilson aides. A surcharge paid by holders of bachelors’ degrees who enroll in community colleges will no longer be assessed.

Welfare: Pending federal approval, a two-tier system is created and benefits are cut. For example, payments to a mother with two children living in an area designated as high cost will be reduced from $607 a month to $565 (a previous reduction to $594 remains unimplemented); the total is $538 in low-cost areas. Disabled and poor elderly people who collect state and federal aid also will have their checks cut, from $614 a month for an individual to $584, or $556 depending on locale.

Health: Medi-cal spending remains at $15.9 billion, with a slight drop in the state’s share of the health program, which is expected to treat 5.7 million Californians this year and next. Other programs include $20 million to immunize children, $12 million for children’s mental health screening and $12 million for teen-age pregnancy prevention.

Allotments to L.A. and Orange Counties: The governor and legislators deadlocked on attempts to release local transit funds to help bail out the two counties from financial troubles. Proposals to shift $70 million a year for 15 years in Orange County and $375 million over five years in Los Angeles County--trimmed by Wilson to $50 million for one year--were set aside, to be taken up by the Legislature again in three weeks.

Other Local Governments: State tax money distributed to counties drops from $14 million to $8 million, but many proposals remain unresolved. They include transferring state-run child welfare, foster care and adoption assistance programs to counties, if they choose, paid for by a shift in state sales tax revenues; giving counties new authority to reduce general assistance grants, and increasing the state’s charge to the counties of maintaining juvenile offenders.

Prisons: Spending for prison operations goes up 13.5%, to almost $3.5 billion, in part to handle increased inmate loads at two prisons opening this year and next. Six more new prisons are on the drawing boards for construction later. The new money also helps pay for 3,700 more employees, taking the corrections work force total to 39,000.