Subplots Keep State Budget Drama Going

In the budget drama now playing here, the main plot--Republicans crusading for a massive tax cut as Democrats fight for school funds--has subplots with enough twists to keep the protagonists negotiating for many more days, perhaps weeks.

This year’s budget is the magnum opus of the legislative session as lawmakers vie to use the spending plan, already almost three weeks overdue, to reshape dozens of departments, programs and policies.

Even as Gov. Pete Wilson and legislative leaders leave unresolved the big questions of how deeply to cut taxes and how to spend the rest of the $4.4-billion surplus, this week’s closed-door negotiations will focus on the lesser issues, the subplots.

Some budget veterans believe there are more issues now because lawmakers lack an ability to compromise. Some blame inexperience. Or, perhaps, lawmakers simply have grown accustomed to turning over big decisions to the governor and legislative leaders.

Whatever the reason, the issues are contentious and reflect the gulf separating Democrats and Republicans here. Until they are settled, there can be no budget accord.

“We’re fighting about philosophy. We’re fighting about policy,” said Craig Brown, Wilson’s finance director.

A list circulating among lawmakers enumerates no fewer than 26 “leadership issues” to be decided by Wilson and each house’s Democratic and Republican leaders, the “Big Five” who are the key negotiators. Additional issues could end up on the conference table in the governor’s cabinet room if the lawmakers cannot settle their differences.

While many unresolved issues have little or no cost, others, including lesser tax breaks and significant spending initiatives, won’t be settled until Wilson and the Democrats who control the Legislature agree on the size of the tax cut. As with almost everything in the Capitol, there will be horse trading as the summer wears on.

“Everything is part of a big package,” said state Sen. Ken Maddy (R-Fresno). “It’s not an ideal way to run the railroad. You fail to analyze and review each on its own merit.”

Among the side issues are policies affecting enforcement of environmental laws, how much money is spent to fight tobacco use, what sort of sex education will be taught in schools, and much more.

Some will affect every Californian; some at first glance look silly.

Insects, Autos, Prisons and Cal/EPA

Wilson’s Department of Agriculture is fighting for $2 million to expand the use of dogs to sniff packages of fruit and plants to find nonnative insects that might ravage state crops. Lawmakers had squished that program, concluding that it netted only 77 potentially dangerous bugs. Wags did the math: $25,974 per hitchhiking insect.

Agriculture Secretary Ann Veneman hotly disputes that characterization, telling lawmakers that the canines have turned up infestations of more than 200 species of insects, including 77 species of particularly problematic pests. The $2 million, she argues, spares farmers tens of millions in crop damage.

In a play with more far-reaching implications, state Sen. Steve Peace (D-El Cajon) and other lawmakers hope to use the budget to change the new state smog check system for vehicle owners, a controversial program that has given talk radio jockeys hours of material with which to pummel Sacramento. The latest changes promise to ease some of the hassle of meeting strict new smog requirements.

Lawmakers and the administration have proposed more than 60 bills to implement the spending plan--compared to perhaps 30 such “trailer bills” in years past. Many are still unwritten, and the wording--often subject to interpretation--determines which side wins.

Some lawmakers, citing recurrent brutality allegations at Corcoran and Pelican Bay state prisons, want to beef up the internal affairs squad, which investigates wrongdoing by prison staff, and move it outside the Department of Corrections. Although the department has repeatedly fought such a move, pressure for change is building, given the recent indictments of staff at Corcoran and an FBI investigation at Pelican Bay.

State Sen. Byron Sher (D-Stanford) hopes to use a trailer bill to set up a process that could abolish the California Environmental Protection Agency, which oversees state departments that enforce environmental laws.

The savings would be small: $5 million. But money isn’t the issue. Environmentalists believe that Cal/EPA has protected polluters. Wilson is not enamored of Sher’s idea; the governor created the agency.

“The budget is the Legislature’s only chance, really, to have an impact on these things,” Sher said.

Although it’s unclear how any single issue will be resolved, the governor has the upper hand in budget fights. He can blue-pencil any expenditure he dislikes, and veto trailer bills. Even more of an advantage, he enters his eighth budget with far more experience than the legislative leaders.

The Republican governor could get into a more compromising mood if he gets most or all of the $3.6-billion-a-year cut in vehicle license fees that he proposes. That would be the largest tax cut in state history, by far.

However, Democrats, led by Speaker Antonio Villaraigosa and Senate President Pro Tem John Burton, are unlikely to agree to the full sum. They want to cap the tax cut at $1 billion.

In any case, with the constitutional deadline for having a budget in place by July 1 already blown, the plot only gets thicker.

First, this is an election year. And Wilson, in his eighth and final year in office, views this budget as a final chance to leave a lasting imprint on the state.

Complicating matters, several veteran senators are being forced by term limits to retire after decades in the Legislature. Many of them hope to use the budget to secure their own last victories. Assembly members, a less schooled bunch, want to avoid being pushed around.

Like each member of the Big Five, Villaraigosa, a Los Angeles Democrat in his first year as speaker and only his fourth in Sacramento, has pet issues.

He wants more state spending for legal immigrants, such as a $14-million program to grant state payments to legal residents who are disabled, and $10 million to speed the naturalization process.

Burton, a San Francisco Democrat, also is in his first year as leader, though he has been a lawmaker for more than three decades. He intends to press for roughly $144 million extra for welfare, after watching repeated cuts during and after the recession. If he succeeds, a mother with two children in urban California, who now gets $565 a month, would have an extra $26 in her monthly check.

“What’s high on my list is doing something for poor people,” said Burton.

Burton and Villaraigosa’s chances depend on how much they give on Republican issues, chief among them the tax cut.

Democrats Seek Raises for State Workers

For his part, Wilson wants enough money for 40 new judgeships. The governor appoints state judges; a win by Wilson would give him one last opportunity to make coveted judicial selections. On an issue rife with intrigue, Villaraigosa and Burton are pressing for a commitment from Wilson to grant raises to more than 200,000 state workers, a largely Democratic group that has had no raise since 1995.

Although Wilson agreed last year to give raises and is offering hikes of between 3% and 13%, he wants to tie any new labor contracts to union concessions that would remove many Civil Service protections. Union leaders believe Wilson wants to weaken, if not dismantle, Civil Service.

Some Democrats speculate that the governor doesn’t want to sign new contracts until after the November election, as part of an effort to limit labor’s ability to collect dues during an election year.

School funding also has election-year implications, given the power, influence and campaign spending by education lobbyists and unions, and voters’ desire to have improved schools.

Under either the Democratic budget plan or the Republican proposal, public schools will get more than $30 billion next year. How that money is spent is the stuff of debate.

Democrats want to give schools about $550 million, largely for use at their own discretion. Wilson opposes that, believing that school boards would use much of it to boost teachers’ salaries.

The governor advocates directing school money to programs he favors. For example, he wants roughly $30 million for another statewide achievement test. The results of the first one were released this month. He also wants $350 million to lengthen the school year to 180 days from the current average of 173.

Wilson and legislative leaders know that any budget deal they strike must be approved by two-thirds of the Legislature. Toward that end, they must make sure that individual lawmakers get something.

Often that “thing” is a tax break for a favored group. Dozens of lawmakers are advocating 91 tax breaks. Many raise eyebrows, such as the one to exempt sausage casings from sales tax. But when the budget deal is finally done, the small tax cuts could top $200 million.

Possible Tax Breaks for Defense, Racetracks

Maddy, who must retire because of term limits after 27 years in the Legislature, is at the center of talks over the smaller tax cuts. The Fresno Republican is a horse racing aficionado who long has wanted to cut taxes paid by horse racing tracks.

In his swan song, Maddy wants to pare the state’s take from the ponies to $40 million from the current $85 million, and he has a good chance of success. The tax was imposed in 1933 when horse racing had a virtual monopoly on legal gambling in California. With the proliferation of casinos and the state lottery, horse racing no longer has a corner on gambling.

Fights over such tax cuts often fall along geographical lines. Silicon Valley lawmakers have won recent battles, gaining tax breaks for high-tech firms engaged in costly research and development.

This year, Southern California lawmakers are fighting for a $50-million defense industry tax break designed to help the state land a significant part of the contract for a new military jet, the Joint Strike Fighter. Assemblyman George Runner Jr. (R-Lancaster) is pushing for the measure. His district stands to benefit handsomely.

Boosting the chance that Runner will succeed, Democrats also like the tax break. The new fighter jet would generate high-paying union jobs. What’s more, it would be a boost for the San Diego district of Democratic Assemblyman Howard Wayne, who faces a tough reelection campaign. Democrats need to win such swing seats to keep their majority in the lower house, a point not lost on Northern California Democrats.

“It’s hard to turn away from that,” said Assemblywoman Carole Migden (D-San Francisco).