Senate Approves $63-Billion Preliminary Budget

Having already rejected Gov. Pete Wilson’s proposed 15% income tax cut, the state Senate on Thursday swiftly approved its version of the $63-billion state budget, setting up a fight with Assembly Republicans over the tax cut.

The 40-member Senate approved its budget 36 to 1, in contrast to the raucous GOP-controlled Assembly, which approved its spending plan Wednesday with no votes to spare, along partisan lines and after hours of debate.

The budget approved by the Senate contains a $775-million deficit with no reserve and proposes spending $1.3 billion more than Wilson has proposed.

The Democrat-controlled Senate also called for a $520-million tax credit for renters, something California had long offered to renters but eliminated during the recession. Wilson opposes the renters credit. The credit is the basis for most of the deficit.

“This budget is closer to being in balance than at any time I can remember,” said Senate Budget Committee Chairman Mike Thompson (D-St. Helena), adding that balancing the budget “should be a slam-dunk this year.”

The debate now shifts to a Senate-Assembly budget conference committee, where legislators will try to reach a compromise. When that committee’s work is done, legislative leaders will negotiate with Wilson over a final deal.

The state Constitution requires that the new budget be in place by July 1, the start of the new fiscal year, although there are no penalties for legislators or the governor for missing the deadline.

With the state flush in tax revenue, Republicans and Democrats say the dollar amounts that separate them are relatively small, suggesting that they should be able to approve a budget quickly.

But on Thursday, Assembly Budget Committee Chairman Gary G. Miller (R-West Covina) said that while Republicans and Democrats will probably reach accord on issues such as abortion funding, the GOP is intent on fighting for the tax cut.

“On the 15% tax cut proposed by the governor, we’re in concrete,” Miller said. “Very simple: We’re in concrete.”

“I would suggest they draw another line,” Thompson said. “There’s no support for that tax cut here. It’s inappropriate to harm education in that way.”

Democrats, including Senate President Pro Tem Bill Lockyer of Hayward, have declared the tax cut dead. They say Wilson’s 15% tax cut, which would be spread over the next three years, would strip public schools of $6 billion they would otherwise receive.

The Senate budget proposes a 4% pay increase for 140,000 state employees, at a cost of $192 million, something not contained in proposals by Wilson or the Assembly.

Like Wilson’s proposal, the Senate version includes abortion funding for poor women and $43.5 million for the Office of Family Planning.