Education Funds Shift Is Rejected

Gov. Gray Davis’ plan to close a $23.6-billion budget shortfall hit a major snag Thursday when Assembly Republicans blocked his proposal to free up $1.7 billion in education spending.

The action prompted Sen. Steve Peace (D-El Cajon) to adjourn the Legislature’s budget conference committee until the matter is resolved. Peace had hoped to wrap up negotiations on California’s 2002-03 budget by Sunday, but he said that goal seems unlikely to be met because the Assembly action has left the size of the budget gap in question.

Davis wants to shift about $1.7 billion in education funding, primarily from the current fiscal year to the upcoming one, to avoid suspending Proposition 98, the 1988 ballot measure that dedicates about 35% of the state general fund to public schools.

Because the shift involves current-year spending it requires the approval of the Legislature before the end of the fiscal year, on June 30.

But the proposal, embodied in SB 1830 sponsored by Peace, came up six votes short in the Assembly, where Republicans banded together to deny the required two-thirds majority.

They did so after Democrats rejected a GOP request for nearly $1 billion to equalize spending between urban and rural schools, beginning in 2003-04, and to help school districts meet retirement benefit requirements.

Republican opposition to the $1.7-billion budget shift proposed by Davis could force administration officials and the conference committee headed by Peace to fill a gap of the same amount, presumably by making deeper program cuts or raising taxes.

The Assembly’s Republican leader, Dave Cox of Fair Oaks, blamed Democrats for Thursday’s showdown, noting that they had rejected a proposal by his caucus.

“We simply believe it’s time for students to be treated on a fair and equitable basis,” Cox said.

One of the governor’s aides, Cabinet Secretary Susan Kennedy, saw it another way, however.

“The Republicans are holding our children’s education dollars hostage,” Kennedy said.

Finance Director Tim Gage warned that the education shift is a key part of the governor’s larger plan to get the state out of the red--an issue of concern to Wall Street investors who lend money to the state.

A meeting between Cox and Kennedy on Thursday ended without resolution. The governor’s proposal could come up for reconsideration when the Assembly meets Monday.

Still pending in the Senate is a measure containing the governor’s proposals to shift a little more than $1 billion in transportation money to help shrink the budget shortfall. About $127 million of that amount comes from the current budget.

But it’s the education bill, with its hefty dollar amount, that is the biggest concern to the Capitol’s Democratic leaders.

“This bill today is the easy part of balancing the budget,” said Assemblyman Darrell Steinberg (D-Sacramento). “If we don’t make this decision, ask yourself where are you going to make up $1.7 billion?”

Assemblyman Thomas Calderon (D-Montebello) accused Republicans of holding up the budget to embarrass Davis, who is seeking reelection.

“This isn’t about politics,” countered Assemblywoman Lynn Daucher (R-Brea). “This is truly about children. We have a golden opportunity to fix something in this state.”

Assemblyman Russ Bogh (R-Cherry Valley) said the $1.7-billion shift would be an “irresponsible” cut to education.

An even bigger issue dividing Republicans and Democrats is taxes. The conference committee has yet to sign off on $3.8 billion in higher taxes and other new revenue proposed by Davis, but did vote Wednesday night to suspend a tax credit for teachers and a solar energy tax credit.