Panel Rejects Some Davis Budget Cuts

Over objections from Republicans, the Assembly Budget Committee approved a plan Tuesday to balance California’s budget with billions of dollars in new taxes but without some of the spending cuts called for by Gov. Gray Davis.

The votes move the budget out of committee and onto the Assembly floor. A similar vote is expected to take place in the Senate today.

Yet a final budget cannot be adopted without a two-thirds majority in both houses, which would require bipartisan support. Republicans said Tuesday that there would be no GOP votes for a budget that was approved without them in committee -- or any budget that included tax increases.

They expressed frustration with committee Democrats for supporting $8 billion in tax hikes on sales, the incomes of high earners and tobacco, and for restoring billions of dollars in spending that Davis, earlier this month, had proposed to cut in his plan to erase California’s $38.2-billion budget shortfall.

“In the face of a $38-billion deficit, we’re spending more money,” said a frustrated Assemblyman Ray Haynes (R-Riverside).

Democrats said the restorations didn’t put the state any further into the red because deeper cuts had been made in other areas and the state would be receiving $2.4 billion in new federal aid as a result of the tax cut package approved by Congress.

Democrats lacked enough votes to make additional cuts to the Department of Corrections; some said the cuts in prison education programs were too deep. However, the issue will be taken up again by the committee in the next several days.

Among the cuts proposed by the governor but rejected by the Assembly panel were $594 million that would have been saved by reducing the rates at which doctors and hospitals are reimbursed for treating Medi-Cal patients. Health-care advocates had warned that the proposed rate cuts were so steep they would make it impossible for most providers to treat the poor.

The committee also rejected a Davis proposal to save $200 million by ending more than a dozen “optional” benefits for Medi-Cal recipients, such as dental and chiropractic care.

In the area of transportation, the committee restored about $500 million that Davis had proposed cutting. Democrats did push through $150 million in additional cuts to the UC and California State University systems over what Davis had called for earlier in the month.

Assemblywoman Judy Chu (D-Monterey Park), who headed the budget subcommittee overseeing health and human services programs, defended the work of her subcommittee. She said that although money was restored in several places, the panel cut to the bone elsewhere.

Senate Republican Leader Jim Brulte of Rancho Cucamonga expressed concern about the direction the Senate Budget Committee appears headed as he prepared to meet with Davis and legislative leaders late Tuesday to discuss the budget.

Brulte called on Democrats to use the new federal aid to close the budget gap instead of restoring spending.

“They ... [raced] to committee to spend it,” Brulte said of Democrats. “The check hadn’t even arrived from Washington.”

Lawmakers who attended the meeting with Davis described it as uneventful, continuing a trend of several weeks in which top legislators gather with the governor to discuss the budget and emerge to report little or no progress.

Davis said he used the meeting to once again encourage lawmakers to break the budget logjam and start building consensus. He repeated that adopting a budget by June 11 would reduce by $40 million the borrowing costs on a short-term loan that California will take out next month.

Later this week, bond rating agencies on Wall Street will issue their opinion on the $11 billion in short-term bonds that state lawmakers plan to issue in June. California’s fiscal problems have driven up the cost of that loan significantly. The Department of Finance projects borrowing costs to be $270 million.

*

Times staff writer Jeffrey L. Rabin contributed to this report.