Legislators Meet to Act on $63-Billion Budget for State

Lawmakers returned from a holiday weekend Sunday to vote on California’s new $63-billion budget, which offers tax cuts for businesses, a 10% boost for public schools and no further hikes in college tuition or cuts in welfare.

Now in the second year of economic recovery, following California’s worst recession since the Great Depression, the state is flush, 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. “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 state Senate was expected to take up the budget and approve it by midnight. In the more partisan Assembly, members probably will take more time before a final budget vote, which may not happen until today.

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 1996-1997 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 will be a relatively small $287 million. Any pay raises for California’s 276,000 state workers would come from that fund.

The state is giving a $230-million tax cut to corporations and banks. Starting Jan. 1, the new business tax rate will 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 will rise by more than 10% over last year’s level, to a record $28 billion.

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

All this is not to say the budget will sail through the Legislature. State law requires that the budget be approved by a two-thirds vote of both houses. Lockyer probably will obtain the necessary 27 votes fairly quickly in the Democrat-controlled upper house.

But in the Assembly, antiabortion Republicans may attempt to hold out, because the spending plan includes full funding for abortions for low-income women.

However, several abortion foes 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 Senate GOP Leader Rob Hurtt of Garden Grove have pushed for cuts to the Office of Family Planning and for a shift of $10 million that previously went to “abortion providers,” including Planned Parenthood. That money will go instead to agencies that only provide contraceptives and not abortions or referrals.

Sen. Ray Haynes (R-Riverside), one of the Legislature’s main abortion foes, hoped to insert language into the budget bill aimed at ensuring parents know their daughters are getting abortions.

The language would limit Medi-Cal abortions to women or teenagers who, in fact, are eligible to receive Medi-Cal. Haynes and other abortion opponents contend that many teens use Medi-Cal to obtain abortions, without their parents’ knowledge, even though their parents can afford to pay.

“We’ve worked long and hard,” Haynes said, adding that if he succeeds, it would be the first time in years that the budget bill has contained “meaningful” restrictions on state funding of abortions.

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 Assembly.

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 teen-age girls.

Katz won Wilson’s commitment for a $500,000 rape crisis center in the San Fernando Valley. Lockyer of Hayward prevailed on Wilson to not veto a $200,000 system of bike and hiking trails in the San Francisco 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 will 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 construct 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 will 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 will 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.

Anti-tobacco effort. In addition to the $436 million raised from tobacco taxes, Wilson and lawmakers are restoring almost $150 million into California’s anti-tobacco research and advertising program. Pringle failed in his effort to add budget language restricting ads that specifically target tobacco companies. Pringle also is trying to block money going to what he called “partisan political” research, including analysis of tobacco industry contributions to politicians.

However, the University of California, which oversees $60 million in tobacco research money, responded with a letter saying it “does not engage in such [partisan] activities,” and that it intends to fund research into public policy issues related to tobacco.

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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.