Assembly in No Rush to Take Vote on Budget Deal

The California Assembly took up a Senate-approved state budget bill Monday, but spent most of the day debating the measure in party caucuses behind closed doors.

Late in the night, it was unclear when lawmakers might shift to the Assembly floor for a public debate and vote.

Legislative leaders had hoped that the lower house would quickly follow the lead of the Senate, which approved its version of the nearly $100-billion budget Sunday. But even though the state’s credit rating has sunk to near junk bond status in recent months while lawmakers and Gov. Gray Davis battled over budget provisions, Assembly members Monday would not be rushed.

“The Senate budget is far from perfect, but it’s the best alternative around and I urge the Assembly to adopt it as written,” the governor told reporters during an afternoon stop at Vine Street Elementary School in Hollywood. Amid the budget debate, Davis became the target of a recall election now set for Oct. 7.

The Assembly faces a take-it-or-leave-it plan fashioned by Senate leaders and approved by the upper house Sunday night on a 27-10 vote. Still, lobbyists who lost out in the Senate version were working to insert last-minute language into budget-related bills in the Assembly.

While the budget is likely to win approval in the coming days, perhaps as early as today, Assembly Speaker Herb Wesson (D-Culver City) and Assembly Republican Leader Dave Cox of Fair Oaks appeared unable Monday to round up the minimum 54 members in the 80-seat Assembly needed to vote for it.

Wesson had spent much of the afternoon and evening calling Democrats one by one into his office in an effort to persuade them to vote for the budget.

It was not a plan that thrilled lawmakers from either party.

In the Senate, Democrats blocked deep slashes to most health, welfare and education programs. The budget leaves spending on public schools and most other major programs largely in tact.

For their part, Republicans blocked income, sales and tobacco tax hikes that Davis and Democrats had advocated. Still, Californians would feel the impact of the proposed budget in their wallets.

The plan relies on a $4-billion-a-year hike in vehicle license fees, one of the least popular of all state levies. The increase would translate into a threefold jump in the so-called car tax that motorists must pay when they register their cars each year.

The proposed budget contains more than $1 billion in fee increases, the California Chamber of Commerce estimates. The fees are aimed primarily at businesses. But individuals would not be spared.

Tuition at the California State University and University of California systems would rise 25% to 30% in anticipation of the budget’s approval.

Facing a two-year deficit of $38 billion, the Senate proposed a compromise that pushes much of the problem into coming years by borrowing roughly $14 billion. As part of that borrowing plan, the state intends to roll over $10.7 billion of the deficit into the next five years through the sale of bonds.

Even at that, the deficit will still be nearly $8 billion next year.

Assemblyman Keith Richman (R-Northridge), who had voted for past budgets, declared himself “disgusted” with the Senate product for the 2003-04 fiscal year and vowed that he would not vote for it. Richman had agreed with Democrats that a half-cent sales tax increase was necessary.

“It’s not fiscally responsible,” Richman said Monday. “It simply rolls the problem into next year.”

The state would repay the $10.7 billion in deficit bonds by using a complicated tax swap. Local governments would give up part of their sales tax revenue, allowing $2.3 billion to go toward paying off the bonds each year. The state would then reimburse cities and counties by giving them a larger share of property taxes.

The tax swap comes on top of $1.1 billion in straight-out cuts to cities and counties in the plan.

Under the proposed spending plan, the state would borrow $1.9 billion to make its annual payment into employee pension funds. The state would borrow an additional $1.5 billion against payments it is slated to receive from the tobacco industry stemming from the settlement of national litigation.

Among the more significant cuts, payments to doctors who treat Medi-Cal patients would drop by 5%, saving $115 million. The proposal pares back $384 million in child-care costs for welfare recipients.

The plan eliminates money for the California Technology, Trade and Commerce Agency and the Office of Criminal Justice Planning. The Arts Council budget would be cut from $11 million to $1 million.

The budget’s delay beyond the start of the fiscal year July 1 resulted in some late payments to vendors. But because the state pays most of bills on the first of the month, vendors for the most part would be spared.

Standard & Poor’s last week cut California’s credit standing to the lowest level of any state -- dropping three rating steps from A to BBB -- because lawmakers have not addressed what has become a perennial imbalance between what the state spends and what it takes in.

The downgrade is expected to cost the state hundreds of millions of dollars in higher interest expenses. The action by Standard & Poor’s also was a reflection of the questions that swirl around the budget plan:

* The Davis administration raised the vehicle license fee by administrative fiat. Republicans have sued to reverse the tax, due to take effect in October.

* The state Constitution prohibits the state from carrying significant debt from one year to the next without voter approval. The conservative Pacific Legal Foundation is considering a suit over $10.7 billion in deficit bonds.

* The California state teachers retirement system already has sued over the state’s plan to sell bonds to finance its pension payments.

The budget also makes several assumptions about savings, including a prediction that it will pare back $1 billion in state worker spending by eliminating 16,000 jobs and convincing unions to forgo raises of 5% to 7%. Labor unions so far have balked at Davis administration requests that they forgo pay raises.

The budget also calls for collecting $680 million more from Indian casinos by renegotiating tribal compacts. Few tribal representatives have shown interest in making such payments.