Senate Approves Budget Boosting Schools, Business

The California Senate easily approved a new $63-billion state budget Sunday night, sending the spending plan with its corporate tax cut and major boost for public schools to the more partisan Assembly, where a vote was not expected until today.

The Senate approved the budget by a 32-5 vote, five more than the required two-thirds majority. Included in the majority were votes from senators who had never before voted to approve a budget, among them GOP Leader Rob Hurtt, who has been in the upper house for four years.

In voting for the budget, Senate liberals cited what they said was a preserved safety net for the poorest Californians, while conservatives pointed to the tax cut for corporations and banks. All supporters embraced the record $28 billion earmarked for public schools, an increase of 10%.

“We have a balanced budget--a real balanced budget. We got a tax cut, and we got a reserve,” said Hurtt, of Garden Grove.

The Assembly was meeting late into the night Sunday on budget-related bills, but was not expected to take final action on the budget itself until today.

Now in the second year of economic recovery, following California’s worst recession since the Great Depression, the state is flush with tax money, giving Gov. Pete Wilson and legislators their first opportunity in years to spend on new programs and revive dormant ones.

“I can’t see any reason why [lawmakers] wouldn’t vote for it,” Senate Budget Committee Chairman Mike Thompson (D-St. Helena) said Sunday before the Senate vote. “It has something for everyone. . . . You’ve got to be pretty pleased with a budget that spends more than ever before on education, reduces class size, protects the safety net and cuts taxes.”

The budget, fashioned by Wilson and Senate and Assembly leaders, includes a combination of tax cuts and spending increases not seen since the boom years of 10 and 20 years ago. Assemblyman Phillip Isenberg (D-Sacramento) has taken to calling it “a budget for the ‘80s.”

Senate President Pro Tem Bill Lockyer of Hayward called the budget “sensible” and cited the highlights: “There’s almost $3 billion in new money for public schools, no student fee increases at colleges and universities. There are no cuts in income maintenance for the aged and blind and for poor kids. There is a significant tax cut.”

With more Californians working and paying taxes, the $63-billion budget for the 1996-97 fiscal year that began a week ago today amounts to a 9% bump upward from last year.

Only a few days ago, state Department of Finance analysts were so confident that the economy would remain strong that they revised upward their estimate of the tax money they expect to flow into state coffers by $55 million.

With all that money, however, the reserve for emergencies such as earthquakes would be a relatively small $287 million. Any pay raises for California’s 276,000 state workers would come from that fund.

The state would give a $230-million tax cut to corporations and banks. Starting Jan. 1, the new business tax rate would be 8.84%, down from the current 9.3%, the lowest it has been since Ronald Reagan’s second term as governor in 1973.

“That’s significant,” said Assembly Speaker Curt Pringle (R-Garden Grove), in his first year as leader of the lower house. “That creates jobs. . . . All in all, it’s a very good budget.”

Wilson’s business tax cut is a fraction of the $10-billion, three-year tax reduction plan he pushed at the start of the year. Democrats refused to support the package, which included a 15% personal income tax cut, saying it would have robbed schools of billions in revenue.

Public schools are the leading beneficiary of the proposed budget. Spending on kindergarten through high school would rise by more than 10% over last year’s level, to a record $28 billion.

Of that, $771 million would be used to reduce class size to 20 students per teacher in the lower primary grades. Once implemented, class sizes would be at their lowest level in more than 30 years, according to the state Department of Education.

In the Senate, four Republicans and one Democrat voted against the budget. At least two of the opponents--Sen. Ray Haynes (R-Riverside) and Sen. Richard Mountjoy (R-Arcadia)--cited California’s abortion funding as their reason for opposition. Also voting against the budget were Sens. John Lewis (R-Orange) and Don Rogers (R-Tehachapi) and Alfred E. Alquist (D-Santa Clara).

“It’s time California comes to grips with the killing of the unborn,” Mountjoy declared.

Sen. Diane Watson (D-Los Angeles), who voted for the budget after voting against it in recent years, called on the abortion foes to push for restoring a $14-million state program that offers pregnant women on welfare prenatal care in their first trimester. Wilson pushed to delete the program.

“Those of you complaining about funds in the budget for abortion, which is legal, ought to be trying to find dollars to put back for indigent pregnant women,” Watson said, calling the spending plan “the best we can get.”

Assembly members were pushing to delay the vote until today, giving them time to analyze the budget and various bills that implement the spending plan. State law requires that the budget be approved by a two-thirds vote of both houses.

In the Assembly, antiabortion Republicans may attempt to hold out. But several abortion foes in the lower voted for last year’s budget after Wilson personally lobbied them. This year, Pringle has placed other potential holdouts in leadership posts, giving him leverage to persuade them to vote for the spending plan.

At the behest of abortion foes, Pringle and Hurtt have pushed for cuts in the Office of Family Planning and for a shift of $10 million that previously went to “abortion providers,” including Planned Parenthood. That money would go instead to agencies that provide contraceptives but not abortions or referrals.

In the Assembly, Pringle expects 35 of the 41 Republicans to vote for the budget, meaning that as many as 19 Democrats also must support it in order to reach the necessary 54 votes in the 80-seat house.

Heading into the floor session, many Democrats were talking tough.

For the Democrats, this will be the first budget since 1980 without former Speaker Willie Brown, a master at lining up votes for budgets.

“Willie had phenomenal influence,” said Assemblyman Antonio Villaraigosa (D-Los Angeles). “There is no one person who can replicate that kind of influence.”

Villaraigosa said he is leaning against voting for the budget, saying it does not do enough for the poorest Californians. After five years of welfare cuts, he said, California should restore some of the money.

“We’ve really hurt the poor and blind and disabled,” Villaraigosa said. “[In the recession], we said everyone had to share the pain. Now, at a time when the economy is doing as well as it is, we have to share in the wealth.”

The budget includes its share of pork--aimed at winning votes of individual members--and pet programs pushed by the governor and legislative leaders. Wilson added $8 million for county district attorneys to prosecute men for statutory rape if they impregnate teenage girls.

Assembly Democratic Leader Richard Katz of Sylmar won Wilson’s commitment for a $500,000 rape crisis center in the San Fernando Valley. Lockyer of Hayward prevailed on Wilson not to veto a $200,000 system of bike and hiking trails in the Bay Area. Pringle and Hurtt won Wilson’s pledge to spend $800,000 for a freeway sound wall in Seal Beach.

Among the larger items, the budget covers:

Prisons. Democrats convinced Wilson to pare $48 million from the proposed $3.6-billion prisons’ budget--far less than the $120 million that Lockyer advocated. About half the cut is due to a reduced estimate in the rate of increase in felons going to state prisons.

Another $25 million would be held in reserve while Wilson and legislative leaders negotiate over legislation to have counties oversee nonviolent felons now in state prisons and whether to build up to six new prisons.

Health and Welfare. For the first time since the recession, families on welfare won’t see a cut in their monthly checks. Disabled people living on government checks would get a slight increase, totaling $75 million statewide. The total health and welfare budget is $16.6 billion.

A disabled individual would get $642 per month, up from the current $626. If, however, the federal government approves Wilson’s welfare cut pending from last year, an elderly, blind or disabled individual would receive $602 a month.

The governor and lawmakers agreed to continue funding prenatal care for pregnant women who are illegal immigrants, though Republican lawmakers will make another attempt to win passage of a bill to kill the program.

Education. In addition to the $771 million for class size reduction, the budget includes $387 million for grants to California’s 7,700 public schools. Each campus would get at least $25,000, with some larger schools getting more, based on their enrollment.

Republicans won a victory in their effort to redistribute roughly $147 million in education funding to suburban and rural districts that receive less money per pupil than the statewide average. They say current formulas favor urban schools. Democrats killed an effort to redistribute to suburban schools $250 million earmarked for districts such as Los Angeles Unified that are under court-ordered desegregation plans.

Staff writers Carl Ingram and Max Vanzi contributed to this report.

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Spending Highlights

The California Legislature began final action Sunday on a proposed $63 billion state budget, up 9% from last year. Here are the highlights:

Taxes: Corporate tax rate dips starting Jan. 1 to 8.84%, from 9.3%. No change in individual tax rates.

Schools: $28 billion, 10% increase. Many new initiatives planned, including greater emphasis on reading skills, lower class size.

Higher Education: $3.8 billion, 6% increase. No tuition hike.

Health & Welfare: $16.6 billion, no increase. No cuts for families on welfare; slight increase in monthly checks for disabled.

Prisons: $3.9 billion, 10% increase because of more inmates.

Anti-tobacco effort: $436 million. For first time in four years, state to fully finance its anti-tobacco campaign.

Local government: $150 million more to local government for public safety.

Reserve: About $287 million. Any pay raise for state workers would come from the reserve.