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Factions Brace for Budget War II : Capitol: Serious deliberations will begin this week. Wilson is eager to keep from appearing as the 'gridlock governor' as he faces reelection.


SACRAMENTO — Get ready, because here it comes.

The state budget battle, which last year brought you unpaid bills, IOUs and deadlock as lawmakers and the governor clashed over the future of the state, is back.

Protesters are ringing the Capitol. Lobbyists are lining up in the hallways outside legislative hearing rooms. And lawmakers are beginning a desperate search for solutions.

Officially, the budget process kicked off months ago, when Gov. Pete Wilson released his proposed spending plan shortly after New Year's Day. But Capitol insiders know that the serious business begins this week, when Wilson unveils a revised plan reflecting the latest economic and fiscal news.

That event is the starting gun for what is supposed to be a six-week sprint to get a new budget in place before the next fiscal year begins July 1. Before then there will be a lot of name-calling, hand-wringing, and finger-pointing. Much of it will take place this week and next when the Assembly and Senate consider their first versions of the 1993-1994 budget.

"Soon we'll have the specter of politicians lashing out like dogs hit by an automobile," said Republican Assemblyman Ross Johnson of La Habra, a veteran of 14 budget battles. "Eventually, people are going to have to sit down and seriously talk about what we're going to do."

Here's the problem: The state is going to spend nearly $41 billion from its general fund in the year ending June 30. But for the 12 months that follow, lawmakers will have only about $37 billion at their disposal. School enrollments, prison populations and welfare rolls, meanwhile, continue to soar.

"We have an enormous deficit and a number of worthy causes that all have a claim on state funds," said Senate President Pro Tem David A. Roberti (D-Van Nuys). "We have to prioritize and apportion."

The state Constitution calls for the Legislature to pass a budget by June 15 and for the governor to sign a spending plan by July 1.

Last year, after the longest deadlock in state history, Wilson signed the budget Sept. 2, 64 days into the fiscal year. During the delay, the state issued $3 billion in IOUs--known as registered warrants--and did not pay the bills from many businesses that sell goods and services to the state.

"Our hope is to get it done on time this year," said Dan Schnur, Wilson's chief spokesman. "Everyone who went through this last year remembers what a hellish time it was."

It does not appear that there will be IOUs this year even if the deadline again passes without a budget. Wilson has quietly agreed to enough short-term borrowing to give the state the cash it needs to pay its bills at least through the end of July.

Although he continues to blame the Legislature for last year's deadlock, the public held Wilson responsible. His job approval rating plunged and an initiative he sponsored to cut welfare grants and seize budget powers from the Legislature was trounced at the polls.

As a result, many political analysts and some of Wilson's own advisers believe the governor has the most to lose if the budget dance drags on again all summer. Wilson does not want to go into next year's reelection campaign looking like the "gridlock governor."

So far, the process this time around is well ahead of where it was a year ago.

Last year, Wilson's proposed budget was obsolete almost before it came off the printing presses because the state's stagnant economy led to a huge shortfall in tax receipts. Even when the governor revised the revenue figures in May, he offered no specific proposal for closing the gap that had opened in his budget.

Democratic lawmakers were busy devising budgets that only could be balanced using tax increases, which even Democratic leaders had said were off the table, or accounting gimmicks, which Wilson had said he would not accept.

In contrast, Wilson's budget proposal this year was more realistic. And although Wilson's proposed spending plan has slipped $2 billion out of balance, his aides say he is prepared this week to offer a revised plan that proposes new ways to close the budget gap.

Legislators have recognized that their options are limited and have begun to prioritize programs with an eye toward saving those they value most and eliminating the services that fall at the bottom of the list.

Last year's sticking point, education spending, appears to be the easiest item on the list this year. Nearly everyone in the Capitol seems to agree that schools should get the same amount per student next year as they are receiving now--about $4,200.

The flash point this time around, if there is one, probably will come over whether to extend a half-cent portion of the sales tax that was enacted as a temporary measure in 1991 and is due to expire June 30.

Wilson insists that the tax must be allowed to expire on schedule. To do otherwise, he argues, would break faith with the voters. Instead, Wilson has proposed using a limited form of deficit spending to get the state through hard times.

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