Approval Near on Major Children’s Health Care Plan

The Legislature was on the verge early today of approving the first major expansion of government-subsidized health care in a generation, while Gov. Pete Wilson and Democratic leaders worked into the night on a possible $933-million tax cut.

The Senate easily approved the $480-million plan to provide health insurance for almost 600,000 children of the working poor. The package then won more than enough votes in the Assembly, but Republican opponents were attempting to use a parliamentary procedure to block passage.

Among measures approved and sent to Wilson for his signature was a major revision of the state Endangered Species Act, and a bill to toughen requirements for teenage drivers.

Lawmakers also were close to approving a 5% cut in tuition for undergraduates at the University of California and California State University systems, and a $1 per unit reduction in fees at community colleges.

Taken together, the fee cuts would cost the state $52 million. College fees also would be frozen for two years. Sen. Jim Brulte (R-Rancho Cucamonga) said Wilson promised late Friday to sign the fee cut into law if it won final passage.

In their final day of work before leaving town for the year, Democratic leaders and Wilson appeared close to an agreement that would cut taxes for middle-income Californians by $933 million and grant state workers--who have not had a pay increase since 1995--a raise of about 3%.

Wilson reached agreement on the tax cut with Senate Democratic Leader Bill Lockyer (D-Hayward). But Assembly Speaker Cruz Bustamante (D-Fresno) was balking, uncertain about the strength of Wilson’s commitment to grant employees a pay raise and concerned that the tax cut would take too much money from public schools.

“There are some problems,” Bustamante said.

As negotiations spilled into the early morning today, Lockyer raised the possibility of extending the session, and Bustamante was meeting with advisors trying to decide how to proceed.

The main part of what Capitol denizens dubbed the “mega-deal” would be an increase in the state income tax credit for children, boosting it from $67 per child to $117 in January, $167 in 1999 and $217 in 2000.

In 2000, the increased tax credit would save families $637 million in taxes. Along with cuts for some businesses, the tax deal would include:

* A cut in state capital gains for people who sell their homes, worth $70 million to taxpayers.

* An increase in the amount of tax-deferred money that taxpayers could save in individual retirement accounts, worth $31 million annually.

* A cut in the “alternative minimum tax”--paid by people who have many deductions--of $85 million.

In exchange for his support, Lockyer won tentative agreement from Wilson to spend $450 million next year to fund county courts, a move sure to relieve fiscal pressure on local government. Court workers would get collective bargaining rights, something Democrats have wanted and Republicans have opposed.

Meanwhile, as lobbyists lined up outside the chambers of the Assembly and Senate and buttonholed lawmakers to make their final pitches on scores of bills, the Senate spent the day methodically voting on its remaining measures.

The Senate easily approved a bill requiring all public school students in grades 2 through 11 to take a basic skills tests this spring as demanded by the governor.

In the far more unruly Assembly, lawmakers spent much of the day mired in internal debates--a situation they found themselves in repeatedly during the year.

Pending before the lower house were bills ranging from the child health care package to the basic skills test for the bulk of the state’s 5.5 million students.

Late Friday, Sen. John Vasconcellos (D-Santa Clara) said he would put off until next year a vote on a bill stalled in the Assembly that would require a state study on whether marijuana is medicinal.

Assemblyman Don Perata (D-Alameda) said he dropped plans to put to a vote his bill to strengthen California’s law banning semiautomatic assault weapons, saying he lacked the 41 votes needed to pass the measure. He will take it up in January when lawmakers return.

The day’s most significant accomplishment came when the Senate easily approved the package of two health care bills. Backers in the Assembly were expected to beat opponents’ attempt to block its passage in the lower house. Kim Belshe, Wilson’s health director who helped negotiate the deal with the Democratic-controlled Legislature, hailed its apparent passage, calling it “the biggest expansion of health care for low-income kids since Medicaid,” a reference to the federal program that began in 1965 as part of President Lyndon Johnson’s Great Society.

“The bottom line is that this is an unprecedented expansion of health care for kids of the working poor,” Belshe said.

The only opposition to the child health care measure came from a handful of conservative Republicans, who contended that the program will amount to an expansion of government subsidies for the poor, and could prompt small employers to cancel group health care plans, knowing the government would provide coverage for their workers.

However, Sen. Ken Maddy (R-Fresno) insisted that the compromise worked out by lawmakers and the Wilson administration ensures that the state won’t add to “the entitlement programs.” He predicted that the new “Healthy Families” program will be seen in years to come as being at “the top of the list” of the major successes by this Legislature.

“For the first time, we have the opportunity to provide health care to the children of the working poor,” Sen. Charles Calderon (D-Whittier) said.

Under the plan, the state will subsidize insurance offered by private companies to the children of low-income working families starting July 1. The program is aimed at helping working parents who can’t afford health insurance. For a family of four, parents would need an annual income of $32,000 or less to qualify.

They would pay a maximum of $27 a month in premiums for their children, plus $5 for visits to doctors and prescriptions. Monthly premiums for lower income families would be capped at $14.

The state cost for the program will be $170 million in the first year. The federal government will pay $310 million.

Sen. Tom Hayden (D-Los Angeles) and some other Democrats criticized the deal, noting that the federal government was willing to spend as much as $855 million for child health care in California. However, Hayden joined other Democrats in voting for it.

Facing a less certain fate was Wilson’s plan to test all public school students in a statewide assessment this spring. The Senate approved the bill by the necessary two-thirds majority, 27-9 in the 40-seat house. But in the Assembly, several Democrats were attempting to kill the testing plan.

The measure was stalled in the 80-seat lower house, four votes short of the necessary 54 need to approve the bill.

Opponents contend that Wilson is trying to force them into agreeing to spend $30 million to buy a test from one of a handful of national testing companies, even though California’s curriculum does not necessarily match what would be on the basic skills test.

Several Los Angeles-area lawmakers also say most national firms that produce such tests write them only in English, while almost 60% of the students in Los Angeles have limited proficiency in English.

There will be a Spanish-language version, but it will be given only to recent Spanish-speaking immigrants. As a result, foes say, the test will not provide meaningful results.

Breaking with other more liberal urban Democrats in supporting the testing bill, Sen. Richard Polanco (D-Los Angeles) said: “In this particular [legislative] process, you can’t get the full enchilada. You end up getting a little at a time. . . . It certainly would be a step of good faith on our part to begin with small increments.”

Wilson has insisted since he took office almost seven years ago that students be given such a test but he has been stymied by lobbyists for public schools and others.

Wilson added to the pressure to approve the test this year by withholding more than $200 million in school funds, including about $40 million for lawmakers’ pet projects, until they agree to his demands.

Sen. Dede Alpert (D-Coronado), who helped draft the testing plan, noted that for almost a decade California students have not been required to take a basic skills assessment that would compare them to students nationally.

“It is important that we establish one test statewide and that every parent be able to know how his or her student is doing,” Alpert said.

In other final actions Friday:

* The Senate approved an overhaul of the state Endangered Species Act, despite protests from opponents who say it undermines protections for vulnerable plants and wildlife. Under SB 231 by Sen. Jim Costa (D-Fresno), farmers who kill an endangered species are exempt from criminal prosecution if the loss was an accident. A second bill, SB 879, by Sen. Patrick Johnston (D-Stockton) allows developers to destroy endangered species and their habitat if they fully compensate for the harm caused.

* The Senate passed SB 1329 by Sen. Tim Leslie (D-Carnelian Bay) to restrict young drivers’ ability to carry underage passengers and drive between midnight and 5 a.m.

* The Senate gave final approval to SB 513 by Lockyer to speed death penalty appeals by creating a new office to oversee them, and encourage more private attorneys to take on such cases by giving them a raise to $125 an hour.

Times staff writers Jenifer Warren, Max Vanzi and Dave Lesher contributed to this story.