Lawmakers Set Stage for Budget Talks to Begin

SACRAMENTO —  The Legislature passed skeletal budgets Thursday to begin the true negotiations on the state’s next spending plan, a process that could drag on for weeks as lawmakers wrangle over how to bridge a $23.6-billion gap.

Each year the Senate and Assembly approve pro-forma budgets fashioned by their respective members--a traditionally low-key procedure necessary for a legislative conference committee to begin work on a compromise plan. This year, however, with Democrats seeking tax increases to help balance the budget, Republicans voiced objections and briefly stalled the plan in the Senate.

Further complicating this year’s budget politics, an appeals court ruled this week that if the budget isn’t approved by the June 30 deadline the state cannot distribute money to schools or pay full salaries to more than 200,000 state workers. The Howard Jarvis Taxpayers Assn. filed the original suit in 1998 to stop the controller from making payments without a budget, a common occurrence because the Legislature does not always approve budgets on time.

“I think it’s very dismaying and a major setback to the state,” said state Controller Kathleen Connell, who issues the state’s checks. “It certainly changes the political dynamics of the budget if we don’t get one on time.”

With the exception of judges, state workers could expect only to receive the federal minimum wage of $6.75 an hour, according to the California Court of Appeal ruling. Schools could lose as much as $3billion in July alone, said Connell, who plans to appeal part of the ruling and seek an injunction.

Richard Fine, the Beverly Hills lawyer for the taxpayer group, described Connell’s plan to appeal as “a waste of taxpayers’ money.”

“The purpose in bringing this suit is to stop the craziness that has occurred for years on end with the politicians continuously avoiding the constitutional responsibility for approving a budget on time and thereby creating havoc on the state of California,” Fine said.

The rhetoric also heated up inside the Capitol on Thursday as Democratic leaders of each house sought to get negotiations moving by approving preliminary spending plans for the 2002-03 fiscal year. The plans in many ways mirror the revised budget floated by Davis, which relies on a combination of spending cuts, tax hikes, borrowing and other budget changes to close a $23.6-billion hole.

Republicans have taken issue with the tax hikes, borrowing and loans. But Senate Leader John Burton (D-San Francisco) warned lawmakers that funding for schools, prison guards and California Highway Patrol officers would be at risk if the Legislature failed to pass the budget proposals and allow negotiations to begin.

Sen. Don Perata (D-Alameda) recalled that when House Speaker Newt Gingrich and congressional Republicans blocked President Clinton’s budget in 1995 and shut down the federal government for several days, the GOP suffered heavy losses in the next election.

The same punishment may await legislative Republicans, Perata warned the GOP lawmakers. He said the voters would “find out who is responsible” and “they will be remembered” adversely at the polls Nov. 5.

Republican Sen. Ross Johnson of Irvine took offense.

“This is not partisanship,” Johnson said. “Republicans have been telling you for years that we are on a course for a fiscal train wreck. The day of reckoning has come.”

“We still believe we have a fundamental disagreement with the governor on why we have a budget deficit,” said Senate Republican Leader Jim Brulte of Rancho Cucamonga. “We think it’s because we took money we didn’t have on a permanent basis and spent it as far as the eye can see.”

Senate Republicans put up the two votes needed to approve the spending plan only after tax increases and other revenue raisers totaling $3.5 billion were stripped from the proposal, with an agreement that the budget conference committee will decide how to fill a gap of that size. The plan cleared the Senate on a 27-11 vote.

Sen. Steve Peace, the El Cajon Democrat who chairs the Senate Budget Committee, said he expects the conference committee to begin meeting Tuesday. He said Democrats will go into the negotiations supporting $3.5 billion in tax hikes, and it will be up to Republicans to identify an equal amount of cuts if that is how they prefer to balance the budget.

In the Assembly, lawmakers approved their version of the budget on a 49-28 party-line vote, but not before the minority Republicans unleashed a barrage outlining their positions in the coming fight.

“The problem we face is an addiction to spending,” said Assembly Republican Leader Dave Cox (R-Fair Oaks), evoking 12-step lingo to suggest the majority party needed to overcome denial and embrace the seriousness of the problem. “We have an addiction.”

“Sometimes I wonder whether you members, when you drive to work” in the state Capitol, “think you are going to a big, white ATM machine,” said Assemblyman Dennis Mountjoy (R-Monrovia).

Democrats did not fire back. Assemblywoman Jenny Oropeza (D-Long Beach), the Budget Committee chairwoman, calmly responded that this was the start of the budget process, and acknowledged that many tough decisions still need to be made.

“There’s no question that this budget does not feel good to anybody,” she said. “But we have a duty.”

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Times staff writer Carl Ingram contributed to this report.