SACRAMENTO — Gov. Pete Wilson and legislative leaders emerged from a series of negotiating sessions on the budget Friday, saying they were moving toward an agreement on a new state spending plan that they hoped could be put before both houses of the Legislature by Sunday night.
The breakthrough came when Democratic Assembly Speaker Willie Brown all but endorsed Wilson's proposal for shifting $2.6 billion in local property tax revenue to the schools and pledged to try to sell the plan to the 46 Democrats under his leadership in the Legislature's lower house.
In return, Brown said he expects the governor to accept smaller reductions in health and welfare and higher education programs than Wilson originally proposed.
If the agreement is reached today, it will set the stage for a showdown Sunday night, when local governments from throughout the state can be expected to lobby fiercely to persuade rank-and-file legislators to reject the position of the leadership.
A key factor will be the position of Senate President Pro Tem David A. Roberti (D-Van Nuys), who opposes the property tax shift. Roberti has not indicated whether he would try to block the tax transfer if doing so would endanger chances of getting a budget in time for the fiscal year that begins July 1.
"I don't want to make a comment before I have run out all the numbers," Roberti told reporters after meeting with the governor.
Brown and Wilson met twice Friday--once with Assembly Republican Leader Jim Brulte of Rancho Cucamonga and the second time with Brulte and Senate leaders Roberti and Ken Maddy (R-Fresno).
"We are encouraged," Wilson told reporters. "I think we have found some common ground. We intend to pursue that."
The five leaders plan to meet again this morning, with the hope of unveiling at least the framework of a budget agreement by midday. The Legislature's constitutional deadline for passing a budget was Tuesday.
In Friday's negotiations, Wilson did not change his local governments proposal but presented it in a way that Brown said showed him, for the first time, that it might be able to win a two-thirds majority in the 80-member Assembly. Brown first proposed the property tax shift a year ago and has supported the concept this year but said he doubted Wilson could obtain the votes for it.
Brown said Wilson's plan would not be as big a blow to local governments as critics have contended.
He said a six-month extension of a temporary half-cent sales tax and the opportunity for voters in each county to make the tax a permanent local revenue source would soften the impact considerably. The state could further cushion the blow by relieving counties of several state-ordered obligations, he said.
The half-cent sales tax, which is scheduled to expire June 30, would be automatically extended in every county until Dec. 31 under Wilson's plan. Voters would be asked in November to make the tax permanent. Counties in which the voters reject the tax extension would have to suffer the consequences, Brown said.
"The ones that do not pass it have chosen not to have their budgets reflect an increase in sales tax in their counties," Brown said. "That's legitimate. If you don't want to raise taxes in your county and your people don't want to cover the services, then that's legitimate.
"The authority has always been requested by the counties: 'Give us the authority to have a piece of the sales tax. We'll collect it, impose it, relieve us of the mandates, and we'll do the job.' That's what the governor's proposal is designed to do."
It remains to be seen whether the leadership can sell such an agreement to rank-and-file legislators, where resistance runs high to any significant reductions in local government revenue. Local officials fear the voters will reject the sales tax extension and leave them without the funds they need to run their programs.
"Obviously, we're concerned," said Dan Wall, a lobbyist for the California State Assn. of Counties. "We're exposed to the full jeopardy of failure or success of the sales tax. We will continue to have the role of performing all the big-ticket state programs on behalf of the state of California, and it doesn't look like we'll have a hell of a lot of money to do that with."
Under the governor's plan, counties statewide would lose about $2 billion, but that cut would be reduced to about $600 million if the sales tax were extended in all 58 counties. Cities would lose $288 million. The remainder of the $2.6- billion transfer would come from redevelopment agencies and special districts, which offer everything from fire services to sewage treatment and cemetery management.
In one distribution of that proposed cut under consideration Friday, the city of Los Angeles would lose $76 million.
Los Angeles city officials had expected to lose no more than $35 million. Upon learning of the plan, the city's lobbyists planned to turn to the Los Angeles legislative delegation--by far the largest in the Capitol--and urge them modify it.
Mayor-elect Richard Riordan condemned the plan at a news conference, where he was joined by Mayor Tom Bradley, County Supervisors Ed Edelman and Mike Antonovich, Los Angeles City Council members John Ferraro and Marvin Braude, and city Controller Rick Tuttle.
"I promised to make public safety and economy the top issues for the future," Riordan said. "A reduction in our local property tax revenues by the state is a direct threat to my commitment. I find it, and the citizens of Los Angeles find it, unacceptable."
Times staff writer James Rainey contributed to this article.