Wilson Budget Plan Focuses on Education, Lacks Tax Cut

Gov. Pete Wilson, hoping to end his tenure with a flourish, unveiled a $73.8-billion budget proposal Friday that would boost spending for education, children’s health programs, prisons and the environment, but offers no tax cut.

With California’s economy having produced 400,000 new jobs in the past year, Wilson anticipates another tax bonanza in the 1998-1999 fiscal year that will push state revenue a hefty 5.5% beyond the current $69.9 billion.

“To sustain the pace of that kind of phenomenal job growth and opportunity,” Wilson said, “we are going to have to make investments both in the physical plant and in children’s health, their development and their education. It’s . . . also the right way to keep jobs coming.”

In his eighth and final budget, the governor proposes to ask voters to approve $7 billion in bonds for everything from school and prison construction to park purchases. Wilson said he is optimistic that voters will authorize the debt because Californians are feeling more secure in their jobs.

Beyond the bonds, however, Wilson has proposed few new initiatives. Rather, he wants to add money to programs for early education and preventive health care, ideas he has long advocated but could not fund in the recession during his first term.

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The budget calls for more money for a panoply of such efforts: new preschool programs for children of low-income parents; screening for newborns to detect hearing problems; and redoubled fights against childhood lead poisoning, AIDS and other infectious disease, and breast, ovarian and prostate cancer.

Among his environmental proposals, Wilson is seeking $64.2 million to help low-income motorists repair their high-polluting vehicles or to buy and destroy the cars.

All the programs are dwarfed by education.

Although public school advocates attacked some specific proposals, they lauded the dollars that would flow to schools. The state would be spending 55% of its general tax revenue on schools and higher education--more than $30 billion out of the $55.4 billion general fund. Wilson called school spending “an investment.”

Wilson’s budget proposal would leave a spare $296 million for an emergency reserve, an amount that alarms some conservatives. He also would set aside $279 million for raises for 160,000 state employees, who have been without a labor contract for almost three years. The money amounts to a raise of less than 3%.

“It’s not enough,” said Chris Voight, who represents a union of state lawyers and administrative law judges.

Buried among the thousands of expenditures huge and small, Wilson earmarked $25,000 for an artist to paint his portrait. The painting would hang in the Capitol, next to those of California’s other governors.

Asked if that would be enough for such art, Wilson said no, adding: “It’s another sacrifice I’ll make for the people.”

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A more significant legacy perhaps would be Wilson’s proposed bonds--an ambitious $7-billion package of debt to build schools and prisons and to finance water projects, parks acquisition and environmental restoration.

If the Legislature agrees to place them on the ballot this June and November and voters approve them, Wilson will be ensuring that his successors spend a larger share of the budget to repay interest and principle on the bonds.

The bonds would impose only nominal costs next year. But the cost of repaying the debt in the future could be as much as $3 billion a year, up from the current $2 billion for bonds already approved.

Lawmakers will begin dissecting Wilson’s spending plan in hearings next month, in an attempt to have a budget in place by the constitutional deadline of July 1, the start of the 1998-1999 fiscal year. Wilson has signed a budget by the deadline only once during his tenure.

After leafing through the phone-book-size document, Democrats generally praised it Friday, while some conservatives grumbled that it includes no tax cut.

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Senate President Pro Tem Bill Lockyer (D-Hayward) called it Wilson’s “best budget so far.” Added Sen. Mike Thompson (D-St. Helena), chairman of the Senate Budget Committee: “We ought to change about six things and pass it next week. It is a pretty good budget.”

“He’s back to prevention. That’s the Pete Wilson who originally ran for governor,” Thompson said.

Assembly GOP Leader Bill Leonard of San Bernardino said the proposal “enjoys broad support among Republicans.” But Senate Republican Leader Rob Hurtt of Garden Grove said he was “surprised” that Wilson included no tax cut proposal, and hopes that Wilson will offer one later in the year.

“I certainly will be pushing for it,” Hurtt said.

Wilson held out the possibility that he will propose a tax cut if revenue is up in May, after people pay their 1997 income taxes. “If, in fact, we have the good fortune to develop an increase in revenue, certainly there are some possibilities I would look at,” Wilson said.

Wilson signed a significant tax cut for individuals and businesses last year that will pare $593 million from the 1998-1999 budget. Also limiting Wilson’s options for new initiatives are agreements that the governor and lawmakers made last September to provide local government an extra $350 million to run trial courts.

One potential threat to state revenue is the economic crisis in Asia; six of California’s 10 top trading partners are there. Wilson and Finance Director Craig Brown said they reduced revenue projections somewhat to reflect the uncertainty.

Brown said, however, that one possible benefit of the problems in Asia is that the Federal Reserve is now less likely to raise interest rates. That could translate into more home sales and construction, which in turn would boost state sales tax revenue, Sacramento’s second largest source of money behind income taxes.

As it did last year, the budget could change significantly in the coming months as revenue rises or falls. But here are some highlights as the budget now stands:

Public Schools

Wilson is proposing to spend $30.8 billion in state and local money on kindergarten through 12th grade next year, up from $29 billion. That amounts to $5,636 per student, up from $5,414 this year. When federal education money is added, the total to be spent on California’s 5.7 million students would be $39.5 billion.

Wilson wants to use some school money for a variety of pet projects, including $52.2 million on vouchers for students at poor-performing schools so they can attend private or other public schools. Lobbyists for the teachers unions contend that such a plan would further damage the lowest-performing schools.

Wilson also intends to push for $350 million to extend the school year from the current 173 days to 180 days, and $1.57 billion to fund reduced class sizes--no more than 20 students per class--in kindergarten through third grades, an increase of $57 million.

Wilson is calling for a $2-billion school construction bond to be voted on in June. If it fails, the measure would go on the November general election ballot.

Higher Education

Altogether, universities and colleges would receive $11.2 billion, a 5.8% increase. Community colleges would receive an extra $288 million, or 6.4%.

In addition to proposing a $1-billion bond for college construction, Wilson wants to add $15 million to plan for a new University of California campus in Merced, a new California State University campus at what was Camarillo State Hospital, plus enough money to accommodate 28,000 new students at community colleges.

After a decade of hikes that saw college tuition more than double, Wilson would set aside $42 million to cut tuition at state universities and colleges by 5%.

Health and Welfare

After spending $14.9 billion on health and social services this year, Wilson is planning to spend $15.1 billion in 1998-1999. Increases would come in job training and child-care programs aimed at helping welfare recipients find and keep jobs.

The budget assumes that about 2 million Californians will be receiving welfare in 1998-1999, down 200,000 from the current year, largely because of major changes to welfare that were approved last year.

Even as welfare rolls fall, Wilson is proposing $100 million to provide health care to 200,000 children of low-income working parents.

California also would pick up roughly $35 million in medical costs for some new immigrants, now that the federal government no longer helps pay for their care.

Under Wilson’s budget, welfare recipients would get no increase in benefits, meaning monthly checks for a family of three would remain $565 in urban and suburban California, and $538 in lower cost regions.

The number of people who collect payments because they are elderly, blind or disabled would rise slightly, to just more than 1 million. Wilson is offering no increase in the state’s share. But a small raise in the federal government’s share will boost pay for individuals by $13 to $663 a month, and by $19 for couples to $1,175.

Prisons

Wilson is proposing a $4.9-billion prison budget, an increase of 4.1%.

California prisons hold 156,000 inmates, a number that rises 1,100 a month. With no new prisons under construction, California could run out of beds for convicted criminals by 2000, when the Department of Corrections predicts there will be 178,000 prisoners.

To help alleviate the crowding, Wilson wants to contract with private prison companies to house 5,000 inmates initially, and 15,000 in future years.

Wilson also is proposing a $1.4-billion bond for new prisons and juvenile facilities.

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Times staff writer Carl Ingram contributed to this story.

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How the Money is Spent

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

* Proposed General Fund Spending

Education: 43%

Health and welfare: 27%

Higher education: 13%

Prisons: 8%

Resources: 1%

Courts: 2%

Other: 6%

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1. Education (K-12)

$23.5 billion

2. Health and Welfare

$15.1 billion

3. Prisons

$4.4 billion

5. Courts

$1.0 billion

6. Resources

$0.7 billion

7. Other

$6.3 billion

* Budget Growth

1998-99: $73.8 billion

* Where the Money Comes From

Personal Income Tax: 39.4%

Sales tax: 29.0

Bank and corporation taxes: 8.6

Motor vehicle fees: 8.0

Highway users taxes: 4.2

Insurance tax: 1.8

Other: 8.8

A Bullish Budget

California’s economy outperformed the nation’s last year. The proposed budget is based on continued growth.

Change in employment

Services

U.S.: 3.9%

Calif.: 4.3%

Finance

U.S.: 2.5%

Calif.: 4.4%

Transportation*

U.S.: 3.1%

Calif.: 5.0%

Construction

U.S.: 3.5%

Calif.: 9.8%

Manufacturing

U.S.: 1.1%

Calif.: 4.4%

* Includes utilities

Note: Figures are percent change in employment, November 1996 to November 1997.

Source: Governor’s budget

A Bullish Budget, Los Angeles Times