Fiscal Plight Trims Plans

A severe shortage of the chief raw material of government -- money -- is likely to change the quantity and character of what California’s bill factory puts out this year.

A new session of the Legislature starts today, and returning lawmakers face a projected $34.8-billion hole in the state budget over the next 18 months. The task of tightening California’s spending to match dwindling revenue will leave lawmakers without the usual dollars and time to tinker with government.

“The budget, the budget, the budget” is how Senate Leader John Burton (D-San Francisco) described the theme of the upcoming session. “Bills that cost any kind of money are going to have a difficult time.”

But some problems facing the state are too pressing to put off, and not all bills come with high price tags. Lawmakers this session are expected to try to respond to a couple of recent events -- the federal cutoff of the state’s supply of surplus Colorado River water and a recent court ruling that declares the 30-year-old Coastal Commission unconstitutional.

They also are expected to debate how to help the 6.3 million Californians who do not have consistent health-insurance coverage and to resume an ongoing battle over how banks use their customers’ personal and financial information.

In a Legislature where lawmakers introduced more than 2,000 bills last year, there will be plenty of proposals to create, gut and tweak laws, from the sweeping to the picayune.

“The 79 other people that I serve with in the Assembly are very creative,” said Assembly Speaker Herb J. Wesson Jr. (D-Culver City), “so I anticipate that the sky will be the limit in some respects. But the main focus is going to be the budget.”

Republicans made modest gains at the November election, but not enough to significantly shape the Legislature’s agenda, which Democrats have dominated for nearly 50 years. The Republicans’ defensive role seems certain to continue in 2003. There are 25 Democrats and 15 Republicans in the Senate; 47 Democrats and 33 Republicans in the Assembly.

Some lawmakers are coming back to Sacramento with a sense of disappointment and anger that could mean trouble for the Imperial Irrigation District, a 92-year-old agency serving desert farms in California’s far southeastern corner.

The district’s board of directors voted last month to reject a 75-year, $2-billion water sale to San Diego County. The vote threw California out of compliance with an earlier promise to gradually cut its use of the Colorado River. In response, the federal government on New Year’s Day reduced the amount of river water flowing to Los Angeles and surrounding cities by half.

Southern California water officials said they have stored enough water to avoid shortages for a year or two and are trying to buy water from northern farmers to help make up the difference.

Sen. Mike Machado (D-Linden), a member of the Senate Agriculture and Water Resources Committee, said Thursday that he expects to introduce a bill aimed at getting the Imperial Irrigation District to sell some water to San Diego County.

The Imperial district was created under a state law and could be disbanded by the Legislature. Machado called that an “awfully extreme option,” but Burton seemed more willing to consider it.

“The issue would be if what they’ve done ends up being a threat to the economic well-being of the state,” Burton said. As options, he listed restructuring the district, eliminating it or putting it under the jurisdiction of the state Department of Water Resources.

Another agency headed for a possible overhaul is the Coastal Commission, which oversees development along 1,150 miles of some of the state’s most valuable real estate. Last week a state appeals court in Sacramento ruled that the structure of the 12-member commission violates the state Constitution’s doctrine of separation of powers because it is dominated by appointees who can be fired at will by the Legislature.

Burton and Wesson have said they want to enact a narrowly tailored bill that fixes the constitutional violation in the commission’s structure. But Republicans, long critical of the Coastal Commission, said it may be time for more sweeping reform, such as limiting the commission’s authority over private property.

Senate Republican Leader Jim Brulte of Rancho Cucamonga and his Assembly counterpart, Dave Cox of Fair Oaks, agreed that their top priority will be to protect employers from what they call the excessive demands of Democrats and labor unions.

“I don’t think the liberals have figured out that there is a connection between the bills they pass and California’s fiscal predicament,” Brulte said.

One way to ease the burden on employers, he said, would be to suspend a recently enacted law that dramatically increases compensation payments to workers injured on the job. Brulte put the cost of the new law at $4.7 billion a year.

Republicans are warily eyeing SB 1 by Sen. Jackie Speier (D-Los Angeles), a slightly revised version of a bill to protect California consumers from the selling, swapping and other sharing of personal and financial information among businesses without the consumer’s knowledge or consent.

The legislation passed the Senate last year but was amended in the Assembly to appease lobbyists representing financial corporations. Speier killed that bill rather than send it to the governor.

Cox called SB 1 an example of a program whose goals may be noble but whose “unintended consequences far outweigh any benefits that might be gained.”

A battle is expected, too, over several plans to expand health insurance coverage in California.

Most dramatic is a bill now being drafted by Sen. Sheila Kuehl (D-Santa Monica) that would make the state itself the insurance agent for all residents. Employers would pay state insurance premiums based on the size of their payrolls. Others would pay on the basis of income. The state would in turn pay doctors and health-management organizations. Such centralization, Kuehl said, would eliminate at least $4 billion in redundant administrative costs by assorted private insurers.

“It’s so good for public health if everyone is insured,” Kuehl said. Undaunted by the budget shortfall, Kuehl argued that her proposal would have no immediate cost.

“It doesn’t require more state money,” she said, “and it won’t take effect for several years.”

Debate over whether and how to offer universal health insurance in California “has to start this year,” she said, because lack of access to affordable health care is such a severe problem.

Speier’s idea to ease the problem is to require employers to either provide health insurance or to pay a tax so the state can insure workers.

And Assemblyman Keith Richman, a Northridge Republican who also is a physician, is working on legislation that would expand the state’s health insurance program for the working poor. The money to pay for the expansion could come from taxing HMOs on the basis of premiums rather than gross profits. The legislative analyst’s office estimates that such a change could generate $700 million a year.