Weighing the Budget: Will the Money Flow? : Wilson should have an easier political time of it this year

There’s more money and more Republican clout in Sacramento this year, but that does not mean that Gov. Pete Wilson’s $61.5-billion budget for 1996-97 will breeze through the Legislature. There is some goodwill in this budget round because California is enjoying a revenue surplus after years of recessionary red ink. Another positive signal: Senate President Pro Tem Bill Lockyer, the leading Democrat in the upcoming budget negotiations, cited “large, large areas of agreement” among Democratic ranks in his initial read of the proposed Wilson budget.

Wilson is spreading the surplus around. He is freezing fee increases for higher education while allowing more money for state colleges and universities as well for K-12 education. He is pushing for a 15% tax cut for individuals, business and banks while providing for a $400-million state reserve.

But the governor fashioned his 1996-97 budget on some assumptions that could change by the time a final spending plan must be approved at midyear. Some of his proposals depend on circumstances outside Sacramento’s control. His other proposals, such as the tax cut, require careful analysis and assessment. The nonpartisan legislative analyst’s office is expected to comment next week.

The governor’s current projections count on major help from Washington, which may or may not be forthcoming, given the ugly mess that passes for federal budget negotiations.

* California is hoping for more than $600 million in federal funds for health care and prison costs related to illegal immigration. That’s only fair; but will the money really come through from Washington?

* On welfare, Wilson wants Washington to block-grant federal funds and allow the state free rein. President Clinton’s veto of welfare reform earlier this week creates confusion that could cost the state plenty.

* On taxes, Wilson proposed a similar 15% tax cut phased in over three years in his last budget but it failed. The last tax proposal included extending a temporary higher tax rate on high income earners. That expired Dec. 31. The analyst’s office will evaluate the governor’s new proposal against current tax rates here and in other states. If tax cuts slow state revenues, state expenditures would also slow down to K-12 under the Proposition 98 formula. That would be but one unintended consequence of the governor’s plan to cut taxes to keep businesses-- and jobs-- from fleeing California.

* On law enforcement, Wilson won’t need help from Washington to put more cops on the street and prosecutors in the court if the Legislature approves his 1% income tax checkoff for public safety in local communities.

* On some issues, such as proposed family planning funding, Wilson may find social agendas disguised as budget disputes. In that case it will be the GOP right, not Democrats, who will give him grief.

As with all budget matters, details are what count. As those become clearer, so will the Wilson budget. The governor has charted a policy course but his fiscal map will require detours if Washington fails to deliver. A one- year budget with multiyear implications cannot place too much hope on manna from Washington. The governor and Legislature must keep their budget focus on what they can control-- state revenues and their own political rhetoric.

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Budget Growth

Figures in billions of dollars

1996: $61.5 billion (proposed- including $3 billion in bond payments)