Legislature Cuts Budget by $2.2 Billion

Lawmakers took a crucial step Wednesday toward erasing an anticipated $12.5-billion budget shortfall by trimming nearly $2.2 billion from California’s current spending plan.

Gov. Gray Davis proposed a series of reductions in November in response to the state’s growing fiscal woes. The more than 80 proposals cut or delay spending on everything from social services to criminal justice, with education taking the biggest hit.

Legislators altered the plan slightly earlier this week to reflect some of their priorities, which include restoring discretionary funding to schools, helping poor people with their energy bills and providing planning money for an effort to bolster struggling schools. In a show of bipartisan support, the package cleared the floor 40 to 0 in the Senate and 66 to 6 in the Assembly.

“These are the types of reductions you have to make when the state has been overspending for three years,” said Senate Republican Leader Jim Brulte of Rancho Cucamonga.

“We have a long way to go,” added state Sen. Steve Peace, the El Cajon Democrat who heads the Senate Budget Committee. “This is the easy part of the process.”

Wednesday’s action set the stage for a much more difficult task still facing legislators: agreeing on a way to close the remaining $10 billion or more of the shortfall.

Assembly Republicans put Democrats on notice that their support will be harder to come by later this year unless serious efforts are made to reduce government spending.

They also used the occasion to criticize Democrats for failing to cut the budget sooner and for allowing thousands of unfilled state jobs to remain on the books.

“Maybe if you listen to the Republicans this year we won’t be in as much trouble next year,” Assembly GOP Leader Dave Cox (R-Fair Oaks) said.

Assemblyman Rod Pacheco (R-Riverside) added in a heated speech: “You favored bureaucrats over crumbling schools.”

Rhetoric aside, the Davis administration welcomed the legislative action, which officials said will enable the state to end the current fiscal year with a positive balance. Davis is expected to sign a series of bills adopting the reductions in several days.

“We believe it’s a historic action,” said Sandy Harrison, a spokesman for Davis’ Department of Finance. “Current-year cuts of this magnitude are unprecedented, which makes this a very significant step toward getting a balanced budget implemented.”

A key issue dividing Republicans and Democrats is how the state will erase the rest of the shortfall, which is expected to materialize over the next 17 months. Republicans say they will oppose any efforts to push expenses into future years.

In addition to reducing spending by $5 billion, Davis wants to free up $5.6 billion by borrowing against California’s tobacco settlement funds and deferring state contributions to pension funds that serve public employees and teachers, among other proposals. The governor is also counting on state legislators to sign off on nearly $600 million in funding shifts.

Senate Republicans took issue with a proposal Wednesday to shift payment for a variety of capital projects from the general fund to bonds.

State Sen. Ross Johnson (R-Irvine) said the plan would “delay tougher decisions until after our much-beloved and universally admired governor stands for election in November.”

Senate President Pro Tem John L. Burton (D-San Francisco) labeled the GOP’s criticism “only the opening gambit of a long campaign” against Davis and the Democrats.

Senate legislators voted 27 to 12 to approve the funding shift, with only one Republican voting in favor of the plan.

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Times staff writer Carl Ingram contributed to this report.