Senate OKs State Budget With $500-Million Tax Cut

The state Senate overwhelmingly approved an $81.7-billion budget Tuesday that boosts spending by 6% for schools and gives more to health, welfare and the environment, while cutting taxes by more than $500 million next year.

The lawmakers also blocked $335 million that Gov. Gray Davis wanted in the budget for a new maximum-security prison. But Senate President Pro Tem John Burton (D-San Francisco) said after the vote that he agreed to a separate deal with Davis that calls for the state to use bonds to finance the prison’s construction.

The Senate vote was a lopsided 36 to 3 in favor of the 1999-2000 spending plan, which is a $4.2-billion boost over this year’s budget.

The vote marked the first time since 1986 that either house has met the constitutional deadline of June 15 for legislative approval of a budget, prompting many self-laudatory statements about the long hours budget committee members put in to reach a deal.

“That does say to the public, ‘We’re here doing our jobs,’ ” said Sen. Kevin Murray (D-Los Angeles). “It makes a good statement about the governor. He was able to get along with the Legislature.”

The budget requires a two-thirds majority vote in both houses. In the lower house, Republicans threatened to hold up the budget, contending that the $500-million tax cut, in the form of a 10% reduction of the annual tax motorists pay for their vehicles, is too small.

In the 80-seat Assembly, Democrats hold 47 seats, and one is held by a Green Party member--meaning that at least six Republicans must vote for it.

Assemblyman Bill Campbell (R-Villa Park) predicted that the Assembly would not approve the document by Tuesday, and criticized Senate Republicans--12 of whom voted for the spending plan.

“I would have liked to have seen them stand up a little more for the taxpayers,” Campbell said.

But Speaker Antonio Villaraigosa (D-Los Angeles) vowed to put the budget to a vote Tuesday night. Citing the strong support given by the Senate, Villaraigosa said Assembly Republicans “have got to be nervous.”

“There’s going to be a lot of pressure,” Villaraigosa said. “Everybody is going to want to know why they can’t support a budget that focuses on education, health care, infrastructure and has a tax cut.”

In a late-night poll, the Assembly voted along strict party lines, 48-31, in favor of the budget. But that was six votes short of the two-thirds needed, and the debate continued.

Approving a budget on time has taken on symbolic importance this year, as Democratic Gov. Davis and the Democrat-controlled Legislature try to prove to the electorate that they can manage the state effectively.

Davis has repeatedly said he wants a budget in place by July 1, the state constitutional deadline by which governors must sign new spending plans into law. Former Gov. Pete Wilson met that deadline only once during his eight years in office.

Budget decisions came easier this year, given the tax-fueled $4.5-billion surplus that rolled into Sacramento. The bulk of that windfall was spent by legislators on everything from swimming pools and park land purchases to health care, schools and the tax cut.

The budget approved by the Senate would spend $900 million more than Davis requested, raising the potential that Davis will use his line item veto authority to trim a variety of proposals.

Lawmakers spent $400 million that Davis had set aside for pay raises for state employees and settlement of a variety of lawsuits left over from past administrations. The legislative version leaves Davis with a $1.1-billion reserve.

Much of the additional spending is earmarked for health care, as Assembly and Senate Democrats designated $200 million more for such programs in the 1999-2000 fiscal year.

The cost of those various health care programs would rise to more than $350 million the next year, and continue upward in the future. For example, a plan to expand Medi-Cal health benefits to some working adults in low-wage jobs will cost $68 million in the coming budget year, rising to $180 million in the next budget year.

Though Davis is a Democrat and the Legislature is controlled by Democrats, the governor is expected to wince at the cost of some of the health care initiatives. Among the items that could face the governor’s blue pencil is $90 million to boost the pay of workers who care for disabled people in their homes.

Additionally, the legislative budget includes $10 million to help homeless mentally ill people by getting them into programs that provide medication, housing, job training and other services, and $37.7 million aimed at helping criminal offenders identified as mentally ill.

Of that sum, $5 million would go to Los Angeles and $5 million to San Francisco for programs in each county aimed at keeping mentally ill offenders out of state prison.

The budget would provide a 2.1% increase for welfare recipients, raising monthly grants for an urban family of three from $611 to $624. The Legislature abolished a provision imposed by Wilson that cut grants to welfare recipients in rural areas.

Early in the process, lawmakers slashed $335 million that Davis wanted in the new budget for a maximum security prison in Delano. But the governor persisted, insisting that without a new prison, California faced the prospect of having courts declare the system too crowded and ordering early release of some inmates.

In a compromise, Burton agreed to support long-term bond financing to pay for the facility. Interest on the bonds, which are paid off over 20 or 25 years, add more than 50% to the construction cost.

“I’m not in a position to in any way embarrass a Democratic governor,” Burton said, explaining why he agreed to the prison. “It was a big deal to him.”

As part of the prison agreement, Burton obtained approval for 3,000 more prison beds for drug treatment and more oversight of parolees. The Legislature appropriated almost $30 million for a variety of programs to rehabilitate inmates, including mentoring, drug treatment and intensive parole supervision.

The prison also was important to one of Davis’ and Burton’s strongest supporters: the California Correctional Peace Officers Assn., the state prison guard union. The union spent $2.3 million on Davis’ campaign last year, and donated $355,000 to Burton’s election committees.

“Maybe the governor brought it to [Burton’s] attention that if we want a Democratic governor in the next century, we better do this,” said Don Novey, the union’s president. “Crime brings Democrats down like a ton of bricks. Gray Davis understands that.”

Some of the most significant changes between the governor’s proposal and the legislative version came in spending for public schools. Davis and lawmakers agreed on the overall amount of state aid to schools--$26.2 billion. However, lawmakers untied many of the strings that Davis wrapped around education funding.

Sen. Jack O’Connell (D-San Luis Obispo) lauded the spending plan as a “great budget for schools,” pointing out that local districts will receive $600 million with no dictates about how to spend it.

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State Budget

Gov. Gray Davis proposed a state budget of $80.8 billion for the 1999-2000 fiscal year. Lawmakers added $900 million, for a total of $81.7 billion. The state Senate approved these changes. The Assembly takes up the budget next:

* Public schools: Legislators grant local school districts far more flexibility in how they spend their $26.2 billion.

* Car tax cut: Saves vehicle owners $250 million in the 1999-2000 fiscal year; $500 million in calendar year 2000.

* Business tax cut: Saves new corporations $28 million in the 1999-2000 fiscal year; $60 million in the calendar year.

* Health care: Adds $200 million, including $90 million to raise pay of workers who care for disabled shut-ins and $67.7 million for expanded Medi-Cal program.

* Colleges and universities: Adds $200 million for staff raises, more full-time teachers, construction, libraries and student aid.

* Environment: Adds $111 million for park and wildlife habitat purchases.

* Pork: Adds $139.9 million for specific projects requested by lawmakers for their home districts, including funding for many parks, swimming pools and public housing projects.

* Headwaters Forest: Cuts $100 million by spreading out payment for purchase of two redwood groves near Headwaters Forest in Northern California.