Davis Budget Plan Stresses School Funding

By DAN MORAIN

Jan. 11, 2000 12 AM PT

TIMES STAFF WRITER

SACRAMENTO — Gov. Gray Davis on Monday proposed an $88.1-billion budget that boosts spending for public schools and the elderly, while offering modest tax cuts, urging relatively flat spending for highway construction and rejecting a Republican call for deep cuts in college tuition.

Davis starts his second year in office with an unprecedented $6 billion more in revenue than he had last year. “California is flush” with tax revenue, Davis said as he unveiled his budget proposal for the 2000-01 fiscal year that will begin July 1.

The budget outlines Davis’ priorities: $50 million to junk old, heavily polluting school buses, $120 million for local law enforcement to hire more officers, and more than $5 million to clean schools of toxic substances and investigate cancer risks posed to children by various pollutants.

By far the biggest single chunk of the budget will go to schools. Davis proposed an increase in spending on public education, including universities, by more than $2 billion, with the bulk of it going to kindergarten through 12th grade.

He is proposing $28.3 billion in state spending next year for kindergarten through 12th grade--$1.8 billion more than was approved by the Legislature in this year’s budget. With local and federal money, California’s overall spending on public schools will be $47 billion in 2000-01, up from $44.3 billion earmarked for this year.

“In these good times,” Davis said, “we must seize our historic opportunity to meet our responsibilities to our children. . . . We must give our children the tools they need, and I will not rest until we do so.”

Davis’ proposal now goes to the Legislature, which will convene hearings next month. Davis will revise the plan in May after Californians pay their state income taxes, which account for 43% of the state’s revenue.

Davis said he expects the Legislature to approve the budget early in the summer so he can sign it by July 1. While Democrats hold strong majorities in the Senate and Assembly, the spending plan requires a two-thirds majority vote in both houses, giving Republicans significant leverage.

In an enticement to legislators to support the budget, Davis set aside a new $100-million pork fund for their pet projects. Usually, governors leave it to legislators to scramble for such money.

In the Legislature, Davis’ fellow Democrats were subdued in their reactions to his proposal. Republican lawmakers quickly denounced some aspects, saying that he is offering too few tax cuts, and charging that his highway and school spending proposals fall short.

“There are some things that need a lot more work, such as transportation,” said Senate President Pro Tem John Burton (D-San Francisco).

Davis’ budget for highways and mass transit is $7.5 billion, roughly what it was for this year. However, he is proposing that local government speed spending of $1.7 billion in road money. If the local agencies fail to act by July 1, Davis said, the state will seize the money and spend it on transit projects.

Sen. Jim Brulte (R-Rancho Cucamonga), the Senate Republicans’ leader on budget issues, labeled that proposal “theft.”

“We will resist efforts to steal local government money,” Brulte said.

Brulte, who wants a 50% rollback in college tuition, criticized Davis for failing to press for deeper tuition cuts. “We expect to see a fee reduction in the budget,” Brulte said. Davis said he may take a second look at the issue in May.

Scott Baugh of Huntington Beach, who leads the Assembly’s minority Republicans, called Davis’ tax cut proposals “woefully inadequate.”

Davis is calling for continued funding of a tax cut enacted at the end of Gov. Pete Wilson’s administration to reduce the annual fee that people pay to register their vehicles. The cut will save Californians a combined $1.7 billion this year and next.

Davis is offering half a dozen other tax cuts, including $100 million for property owners who agree to preserve open space, $35 million in low-income housing credits and $10 million in tax credits for employers who give workers leaves to pursue graduate education.

The governor also is calling for $500 income tax credits for individuals who care for elderly relatives, saving people about $47 million in taxes.

Davis made several other proposals, amounting to $270 million, aimed at helping people avoid going to nursing homes, increasing state inspections of such facilities, and raising the pay of nursing home workers and workers who care for frail and elderly people at their homes.

Calling his spending plan “prudent and careful,” Davis proposes to set aside $1.2 billion in a reserve for emergencies and squirrel away another $500 million to pay off half a dozen major lawsuits pending against the state.

He also is earmarking $665 million to repay, with interest, 1.7 million people who were forced to pay a $300 “smog impact fee” when they registered out-of-state cars in California. The fee was imposed in 1990 and was ruled unconstitutional last year.

The budget represents an 8% jump over the $81.3-billion budget approved last June. Much of the increase stems from an unexpected windfall of $3 billion, the result of the state’s booming economy.

The budget has ballooned as more Californians have found work, received pay raises, stock bonuses and dividends--and paid taxes. In 1999, there was a 14% jump in personal income taxes withheld, while sales taxes have grown faster than at any time since the early 1980s, the state Department of Finance reports.

In the new fiscal year, Californians for the first time will earn more than $1 trillion in wages, a 6% jump over 1999-2000. Also for the first time, the state work force will top 300,000, amounting to 8.8 state workers for every 1,000 Californians.

That’s the highest ratio since 1984, and reverses a trend during the administrations of Republicans George Deukmejian and Wilson, both of whom generally attempted to scale back government.

Education Spending Would Increase

In California, the state budget pays for everything from schools, parks and prisons to county mental health care. Specifics outlined Monday included:

* Public schools: Davis is proposing to spend $257 million more than the minimum required by the complex school funding formula approved by voters in the form of Proposition 98 in 1988.

The school budget translates to $6,313 a year per student, an increase of $268 from this year’s $6,045--but still about $500 below the national average, according to the legislative analyst’s office.

Davis is calling for $21 million for new summer instruction in algebra for seventh- and eighth-graders, and a $62-million increase for summer schools. Additionally, Davis is calling for a system of incentives for top performing students, giving high school graduates as much as $5,500 toward tuition, something several other states have done.

He is seeking funding for incentives to recruit teachers, including mortgage assistance, bonuses of up to $30,000, and $11,000 knocked off college costs for students who decide to enter teaching. Davis also is proposing special training for 70,000 teachers.

“If you compare the proposal to any other state in the nation, this is very ambitious,” said Davis’ education secretary, Gary K. Hart.

* Higher education: The state would spend $8.8 billion on public colleges, an 11% increase, with additional money coming from other sources. The UC system would receive a 9.3% increase in state funding, to $4 billion. The California state university system would get a 7.5% increase, to $3 billion. Community colleges would get a 6.5% increase, to $5.7 billion.

While tuition would remain the same at the colleges and universities, the governor proposes to increase the amount available for scholarships under the Cal-Grant program by $30 million, enough to help pay the costs of 62,000 students. That’s double the number of students who received such grants five years ago.

Davis rejected a $10-million request to begin plans to open a new Channel Islands state university campus in Ventura County. But he earmarked an extra $14.3 million to speed by a year the opening of a new University of California campus at Merced in 2004.

Davis is calling for $75 million to open research institutes at three UC campuses--and $25 million to upgrade UC teaching hospitals.

* Law enforcement: The prison budget would rise to $5.4 billion, a 1.8% increase over this year. Davis wants to add 25 people to a new inspector general’s office, at a cost of $2.3 million, to investigate wrongdoing in in the state prison system.

* Health care: Davis would spend almost $19 billion on health and welfare, a 6% increase. He proposes $52 million, spread over this year and next, for a new department that will oversee health care insurers. The Legislature created the new agency in an effort to rein in HMOs. Jamie Court, a Santa Monica-based HMO critic, called the amount insufficient.

Davis is the beneficiary of lower welfare caseloads, and thus relatively flat welfare costs. The state predicts that the number of people in the main welfare program known as CalWorks will fall to 557,000, down from 589,000 this year--and significantly below the highs of more than 900,000 during the recession in 1993 and 1994.

* Mental health: Davis proposes a $10-million boost to a program begun in three counties in October to find housing for severely mentally ill people who are homeless. At last count, caseworkers in Los Angeles, Sacramento and Stanislaus counties had found housing for 579 people, with a goal of reaching 1,100 by May. Another $5 million will be targeted at parolees who are severely mentally ill.

Times staff writers Carl Ingram, Miguel Bustillo and Julie Tamaki contributed to this report.

A State Record

Gov. Gray Davis’ proposed $88.1 billion spending plan includes a $69 billion general fund, paid for by income, sales and business taxes.

BIG THREE COSTS

Education (K-12) $28 billion, up 6.25%

Health and Human Services $18.9 billion, up 6%

Higher Education $8.8 billion, up 11%

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

How the Money Is Spent

Here is a detailed look at Gov. Gray Davis’ proposed 2000-01 California budget.

PROPOSED SPENDING

Education (K-12): $28 billion