Wilson Slashes $1.5 Billion From Budget, Then Signs It

Gov. Pete Wilson signed the new $75.4-billion state budget Friday but invoked his line-item veto authority as never before, surprising legislative leaders by slashing $1.5 billion from the spending plan.

Assembly Speaker Antonio Villaraigosa said he considered walking out of a news conference that Wilson had convened to herald the budget signing. Senate President Pro Tem John Burton (D-San Francisco) opted to stay away, saying, “I just had other stuff to do.”

“Clearly, there was no understanding on our part that we would be cutting anywhere near that level,” said Villaraigosa (D-Los Angeles).

Wilson insisted that many cuts--in areas from parks to programs for the elderly--were aimed at ensuring that the state has a “prudent reserve,” which now stands at $1.3 billion. But the Republican governor also hopes to spend next week negotiating with Democrats who control the Legislature to gain a few final victories before his eight-year tenure comes to a close.

Holding out a carrot, Wilson said he is willing to restore some money if lawmakers bend to his desires. Wilson wants them to approve education programs he favors, and to agree to $50 million for new reservoirs that would provide water for the Central Valley and Southern California.

The governor uses his line-item veto authority every year, often promising to barter with lawmakers to restore some of the cuts. What is different this year is the magnitude of the blue-penciling--the most ever for Wilson. Despite the stakes, however, Democrats may be less willing to deal this time, knowing that there will be a new governor come January.

“I can tell you the Legislature is not going to appreciate someone holding a gun to our head and saying [my] way or the highway,” Villaraigosa said, though he added that he is willing to talk.

Burton all but foreclosed deals on the reservoirs and judges. “If you give in to political extortion . . . they’ll just keep doing that to get their way,” he said.

Wilson cut funding for dozens of parks, swimming pools, museums and environmental programs lawmakers coveted in this election year. He blue-penciled spending proposed by lawmakers who voted against the budget--all of whom were Republicans--and deleted pork barrel projects championed by Democrats who have irritated him.

Several Orange County projects survived the governor’s blue pencil. Wilson appeared especially interested in boosting Assemblyman Jim Morrissey (R-Santa Ana), who is in a tough reelection fight.

Morrissey emerged with the most pork of the Orange County delegation: $375,000 for an after-school program in Anaheim, $300,000 for a senior citizens center in Santa Ana and $87,000 for graffiti abatement.

Assemblyman Bill Morrow (R-Oceanside), who voted against the budget, came out with the least.

Also in the budget is $700,000 to help build a high school in Los Alamitos, $1.5 million for dredging in Upper Newport Bay, $750,000 for a science center in Santa Ana and $475,000 for the Orange County Marine Institute.

Wilson deleted $45,000 for the Boys and Girls Club of Anaheim.

Overall, the biggest budget losers were state workers. Wilson vetoed more than $400 million for pay raises for them. The governor is demanding that they give up some Civil Service protections in exchange for pay hikes--something they refuse to do.

Democrats and Republicans say there’s little chance of a resolution this year.

Wilson reserved the bulk of his deletions for public schools, $457 million in all, plus an additional $135 million for higher education. Even with the cuts, however, the combined education budget is more than $30 billion, by far a record.

Wilson said he would restore much of the school money if he and lawmakers reach an agreement on education legislation between now and the end of the session next week. He promised to be “deeply, personally involved in the negotiations” during the next week.

Wilson wants requirements that struggling students attend remedial summer school and after-school programs, and that students who perform below grade level in key subjects not be promoted.

Second-Latest Budget in State History

The governor also is pushing for what he sees as strict reforms for bad schools, perhaps including tax-funded vouchers that students at the worst schools can use for tuition at private schools.

Although Democrats agree that students who don’t meet expectations should not be promoted, Villaraigosa vowed that any deal would include a “safety net” to help troubled students remain in school. Democrats refuse to agree to vouchers.

“We still have a week; that’s plenty of time to resolve outstanding issues,” Villaraigosa said.

Although they will no doubt fight next week, Wilson and legislative leaders Friday took time out to once again hail the spending plan that Wilson signed into law--52 days past the start of the 1998-99 fiscal year and the constitutional deadline for it.

This year’s budget is the second latest in California history. The record delay was during the recession in 1992, when lawmakers were faced with deep cuts and Wilson didn’t sign the budget until Sept. 2.

“We were late, but this is a budget that is worth the wait,” Wilson said. “This is a record budget, record spending, a record tax cut, record investments.”

This year the state was flush with $4.4 billion in unexpected tax revenue. Lawmakers used $1.4 billion for a tax cut, which could grow to $3.6 billion annually by 2003 if state revenue continues to rise. The tax package includes a 25% cut in the vehicle registration fee, plus breaks for renters, families and business.

Altogether, public schools will get $23.8 billion in state money, plus about $10 billion from local government. The state money amounts to a $2.2-billion increase, raising the amount the state spends to $5,700 per student, an increase of $250 from last year.

State colleges and universities will get $7.6 billion, a $907-million increase. Student fees will be cut by 5% at the University of California and California State University systems.

Some of the biggest increases came in welfare, where the monthly check for a mother with two children in an urban area will rise to $611 from the $565 figure of last year. The state also is spending on an array of programs for low-income legal immigrants, including food stamps and disability benefits.

But most attention Friday was on the cuts. For the most part, Wilson slashed spending inserted by legislators.

For example, he lived up to his promise to add $40 million to various programs for the elderly but vetoed more than $50 million recommended by the Legislature.

A large hit came in Adult Protective Services, which strives to both prevent and investigate elder abuse. The governor stuck with the $20 million included in his budget, noting that it will double the state’s existing efforts. He cut the Legislature’s $32.7-million increase, which would have attracted another $25 million in federal and local reimbursements.

Wilson’s choices were especially evident in his decision to pare $3.4 million from the California Arts Council budget of $27.5 million.

He cut pork barrel projects favored by Sen. Richard Polanco (D-Los Angeles), who has clashed with the governor repeatedly. Getting the ax were the New California Center in Los Angeles and a museum proposed by the Los Angeles Police Department and pushed by Polanco.

“The governor has the utmost respect for the LAPD and their association,” said Sean Walsh, the governor’s spokesman, “and he believes that while their museum is a worthwhile project, they need a new [advocate] to get them across the finish line.”

That’s not to say Los Angeles was shut out. Having an Assembly speaker from Los Angeles helps.

The governor retained $2 million for a Hollywood museum, $5 million for the Walt Disney Concert Hall at the Los Angeles Music Center and $2 million for the Simon Wiesenthal Center.

In the schools budget, Wilson deleted $75 million for remedial summer school, $50 million to help low-performing schools improve, and $30 million to encourage students from low-income families to enroll in four-year state colleges. That money could be restored if there is a deal with Democrats.

Surprisingly, Wilson cut $44.4 million for class size reduction of at least two core classes in the ninth grade. He and lawmakers had touted ninth-grade class size reduction as a centerpiece of the budget accord.

Because the school year starts within a week or two, he said, many schools won’t be able to accomplish the goal until the second semester and cannot spend all the money originally earmarked for class size reduction.

One of the biggest losers was Supt. of Public Instruction Delaine Eastin. Wilson cut $9 million from her $35-million budget. Underlying the governor’s action is a fierce power struggle between the Education Department, run by Democrat Eastin, and the State Board of Education, which has been dominated in recent years by appointees of Republican governors.

“This is his way of sticking me in the eye,” Eastin said. “He’s just trying to punish me for daring to have my own opinions.”

Wilson cut $43 million for construction at UC campuses, $61 million for building projects at Cal State campuses and $11 million at community colleges.

For the most part, he deleted money that lawmakers inserted for actual construction, leaving enough to draw plans for the projects.

*

Times staff writers Amy Pyle, Nick Anderson and Kenneth R. Weiss contributed to this report.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Where the Money Goes

Here is a look at Gov. Pete Wilson’s 1998-99 California budget.

GENERAL FUND SPENDING

(1) 41.6%

(2) 26.8%

(3) 13.2%

(4) 7.8%

(5) 3.7%

(6) 1.9%

(7) 1.7%

(8) 1.6%

(9) 0.7%

(10) 0.7%

(11) 0.3%

****

GENERAL FUND EXPENDITURES

(1) Education (K-12): $23.8 billion

(2) Health and Welfare: $15.3 billion

(3) Higher Education: $7.6 billion

(4) Youth and Adult Corrections: $4.4 billion

(5) Miscellaneous: $2.2 billion

(6) Resources: $1.1 billion

(7) Tax Relief: $1.0 billion

(8) Courts: $900 million

(9) State and Consumer: Services $400 million

(10) Business, Transportation and Housing: $400 million

(11) Environmental Protection: $200 million

****

Where the Money Comes From*

Personal Income Tax: 50.8%

Sales Tax: 33.3%

Bank and Corporation Tax: 10.5%

Motor Vehicle Fees: 0.05%

Insurance Tax: 2.3%

Estate Tax: 1.4%

Liquor Tax: 0.4%

Tobacco Taxes: 0.2%

Horse Racing Fees: 0.03%

Other: 1%

* Money is for general fund, figures do not total 100% because of rounding.

****

GOVERNOR’S VETOES**

Education (K-12): -$457 million

Health and Welfare: -$299 million

Higher Education: -$135 million

Youth and Adult Corrections: -$40 million

Miscellaneous: -$381 million

Resources: -$124 million

Legislative/Executive: -$3 million

Courts: -$10 million

State and Consumer Services: -$4 million

Business, Transportation and Housing: -$45 million

Environmental Protection: -$7 million

Trade and Commerce: -$15 million

** From general and special funds.

Still Fighting Over Funds

The state budget is signed, but the fight is not over. Republican Gov. Pete Wilson and Democrats in the Legislature will attempt to strike deals on some major items tied to the budget.

Schools

What Wilson wants: Required remedial summer school and after-school programs for struggling students; an end to “social promotion” of students performing below grade level; strict reforms for bad schools, perhaps including tax-funded vouchers that students at the worst schools can use for tuition at private schools.

What the Legislature will give: Lawmakers probably will agree to remedial summer school, will refuse to agree to vouchers, will fight many of Wilson’s proposals for low-performing schools.

Prospects: If Wilson holds out for vouchers, there will be no deal. If not, they may compromise and Wilson could release much of the $457 million in school money he vetoed.

****

Environment

What Wilson wants: $50 million for at least two new reservoirs for Central Valley and Southern California water needs.

What the Legislature will give: Most Democrats and many Northern California Republicans want to wait for the next governor. Central Valley lawmakers and some from Southern California will push the plan.

Prospects: Dim, because Democrats obtained June memo from a Wilson aide saying these projects would help elect Republicans.