Senate Democrats Seek to Block Tax Rebate in Debate on Budget

SACRAMENTO —  A Senate fiscal committee sent a preliminary $41.9-billion version of the new state budget to the upper-house floor Tuesday after Democrats muscled through an amendment aimed at blocking Gov. George Deukmejian’s proposed $700-million tax rebate.

The spending bill, which would add more than $1 billion to the governor’s proposed budget for the upcoming fiscal year, was approved by the Budget and Fiscal Review Committee on an 11-0 vote.

The unanimous vote belied a deep split between Democrats and Republicans over the tax rebate proposal, introduced as an amendment to the budget by committee chairman Sen. Alfred E. Alquist (D-San Jose).

The amendment, declaring that it is the intent of the Senate to give the $700-million surplus to financially strapped schools and local governments instead of returning it to taxpayers, passed on a partisan 7-4 vote.

Republican committee members, who cast all the “no” votes on the rebate amendment, made it clear when they voted later for the main spending bill that they expect Democrats to compromise as the budget winds its way through the legislative process.

Once the Assembly and Senate pass their respective versions of the governor’s budget, the proposed spending plan will go to a two-house conference committee, where a final version of the budget bill will be hammered out. That version will then have to be approved by each house.

“Obviously, the conference committee is going to rearrange the budget considerably,” Sen. Jim Ellis (R-San Diego) predicted.

Alquist, in offering the amendment, challenged Deukmejian’s contention that returning the money to taxpayers is required under terms of an initiative overwhelmingly approved by voters in 1979. The initiative placed spending limits on all levels of government, requiring that the limits be adjusted annually to keep pace with inflation and population growth. Any surpluses are to be returned to taxpayers.

But Alquist and other Democrats insist that they have options other than giving the money to taxpayers.

“We can allocate funds to schools and local governments without violating the Constitution,” Alquist said.

Alquist conceded, however, that he faces a difficult “road ahead” in bucking the governor. He said the Legislature was still far from a consensus on what to do with the surplus.

The committee-approved budget increases spending in most areas of state government and is sure to invite vetoes by Deukmejian if it is not trimmed back.

Major budget actions included restoration of an $8-million cut that would have ended the state’s participation in the Cal/OSHA program. The committee also restored the majority of the Administration’s Medi-Cal cuts ($150 million) and added funding for urban school districts eliminated by Deukmejian ($86 million). It more than doubled the new funding proposed by the governor to finance toxic waste cleanup and programs to combat the AIDS epidemic.

Earlier in the day, Democrats on the Assembly Ways and Means Committee, in the final stages of completing work on their own version of the budget, indicated general agreement with upper-house Democrats on the tax rebate question.

Democrats angrily accused the Administration of pushing the tax rebate at a time when state budget cuts have brought health programs in Los Angeles and some other California counties to the verge of collapse.

Assemblyman Mike Roos (D-Los Angeles), the Speaker pro tem in the lower house, said state budget cuts led to the elimination of a trauma center at Hollywood Presbyterian Hospital and probably will force other emergency rooms to close. He said the cuts will lead to “hundreds of needless deaths,” while the average $50-a-person tax rebate envisioned by Deukmejian will hardly pay for “a new pair of shoes.”

Roos and other Democrats on the committee said they would like to give California voters the chance to decide whether to accept the rebate or use it to increase funding for education and other programs.