Legislative Leaders Unite Against Tax Hike : Budget: Pact could mean deep cuts in health, education and welfare programs to eliminate $3-billion shortfall.

SACRAMENTO —  Republican Gov. Pete Wilson and legislative leaders from both parties agreed Thursday that the state’s budget shortfall--estimated at $3 billion and growing daily--will have to be erased without a tax increase.

The agreement raises the likelihood of deep cuts in the health, education and welfare programs that consume most of the state’s $44-billion general fund budget--if the state is to end the current fiscal year without a deficit.

With nearly half the fiscal year gone, it appears that across-the-board reductions of 10% or more would be needed to balance the books for the budget year that ends June 30.

Wilson, emerging from a meeting with the Democratic and Republican leaders of the state Senate and Assembly, said he asked the lawmakers to strive informally to reach a consensus on what to do. He said he expected them back in the Capitol before their scheduled return in January for a special session on the budget.

“The four leaders reported to me that they could not find in their individual caucuses any enthusiasm for tax increases,” Wilson said.

He added: “I think we are going to be compelled . . . to take a very hard look at doing some things that are very unpleasant, things we won’t enjoy doing, that in fact we will find distinctly unpleasant. It means we are going to have to look at all manner of things from which people have been spared in the past.”

Wilson would not detail the spending reductions he is considering. But it seems almost certain that the governor will again propose to cut welfare benefits to poor women and their children to 1988 levels, the lowest allowed by federal law, and to cut the budget for public education.

The Democratic-controlled Legislature rejected those proposals earlier in the year but agreed to cut welfare benefits 4.4% and to limit public schools to the amount needed to keep pace with enrollment increases and inflation.

Another 4.4% cut in welfare payments, reducing the stipends to about $630 a month for a parent with two children, would save the state about $55 million over the remainder of the year, Wilson aides have said. A 10% reduction in education spending for the final six months of the school year would save a little less than $1 billion.

Democratic leaders agreed that there is no appetite among legislators for a tax increase on top of a $7-billion-plus hike that was used to help erase last year’s $14.3-billion budget shortfall.

Assembly Speaker Willie Brown (D-San Francisco) said, however, he favored an aggressive public works program to rebuild the state’s infrastructure by borrowing at interest rates that have hit 18-year lows. Brown said this approach would “create a massive employment program in the construction trades” that would “probably get people eligible to buy cars and televisions and things of that nature.”

Wilson, expanding on a theme that he has been developing for most of the month, again blamed much of the state’s fiscal woes on the fact that increasing numbers of poor immigrants are moving to California while more taxpaying citizens are leaving for other states.

People who are in the country illegally may not receive welfare benefits. But Wilson noted that they cannot be turned away from hospital emergency rooms or public schools. Wilson said the federal government should do more to compensate the state for the costs of providing these services.

“This is a state that historically has welcomed migrants from other states and other nations,” Wilson said. “We think we have been renewed and refreshed and enriched by the energy of the people who have come here. But it is a fact right now that we are experiencing a tremendous increase in the population with respect to the very young and the very old. And we are actually losing those in between, those who are in the working and productive years.”

The governor said 7% of the state’s welfare recipients have moved here from other states within the last year, and half of them had been on welfare in their former homes.

In addition, the state Department of Social Services estimates that by June, 1993, children born in the United States to parents who are here illegally will account for about 25% of the welfare caseload.

Democratic leaders disputed Wilson’s contention. Brown said the governor sounded “like someone who wants to erect barriers at the border.”

In another budget matter, Senate Democratic leader David A. Roberti of Los Angeles disclosed that plans are being firmed up to shield the nonpartisan offices of the legislative analyst and auditor general from spending cuts resulting from voter approval of Proposition 140, which required substantial reductions in the Legislature’s own budget.

Roberti said the legislative analyst’s costs of reviewing ballot propositions for the statewide voter pamphlet would be shifted from the Legislature to the secretary of state’s budget and that costs of audits of state agencies by the auditor general would be transferred from the Legislature to the executive branch of government. He said 70% of the auditor general’s activity involves investigations required by the federal government.

The legislative analyst is the Legislature’s chief adviser on budgetary and other fiscal issues. When it is not performing investigations for the federal government, the auditor general’s office examines the performance of state agencies for the Legislature.

Times staff writer Carl Ingram contributed to this report.