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Approval Near on Major Children's Health Care Plan

Legislature: Wilson, Democratic leaders try to work out $933-million tax cut for middle class. Lawmakers send to governor a major revision of Endangered Species Act.


SACRAMENTO — The Legislature was on the verge early today of approving the first major expansion of government-subsidized health care in a generation, while Gov. Pete Wilson and Democratic leaders worked into the night on a possible $933-million tax cut.

The Senate easily approved the $480-million plan to provide health insurance for almost 600,000 children of the working poor. The package then won more than enough votes in the Assembly, but Republican opponents were attempting to use a parliamentary procedure to block passage.

Among measures approved and sent to Wilson for his signature was a major revision of the state Endangered Species Act, and a bill to toughen requirements for teenage drivers.

Lawmakers also were close to approving a 5% cut in tuition for undergraduates at the University of California and California State University systems, and a $1 per unit reduction in fees at community colleges.

Taken together, the fee cuts would cost the state $52 million. College fees also would be frozen for two years. Sen. Jim Brulte (R-Rancho Cucamonga) said Wilson promised late Friday to sign the fee cut into law if it won final passage.

In their final day of work before leaving town for the year, Democratic leaders and Wilson appeared close to an agreement that would cut taxes for middle-income Californians by $933 million and grant state workers--who have not had a pay increase since 1995--a raise of about 3%.

Wilson reached agreement on the tax cut with Senate Democratic Leader Bill Lockyer (D-Hayward). But Assembly Speaker Cruz Bustamante (D-Fresno) was balking, uncertain about the strength of Wilson's commitment to grant employees a pay raise and concerned that the tax cut would take too much money from public schools.

"There are some problems," Bustamante said.

As negotiations spilled into the early morning today, Lockyer raised the possibility of extending the session, and Bustamante was meeting with advisors trying to decide how to proceed.

The main part of what Capitol denizens dubbed the "mega-deal" would be an increase in the state income tax credit for children, boosting it from $67 per child to $117 in January, $167 in 1999 and $217 in 2000.

In 2000, the increased tax credit would save families $637 million in taxes. Along with cuts for some businesses, the tax deal would include:

* A cut in state capital gains for people who sell their homes, worth $70 million to taxpayers.

* An increase in the amount of tax-deferred money that taxpayers could save in individual retirement accounts, worth $31 million annually.

* A cut in the "alternative minimum tax"--paid by people who have many deductions--of $85 million.

In exchange for his support, Lockyer won tentative agreement from Wilson to spend $450 million next year to fund county courts, a move sure to relieve fiscal pressure on local government. Court workers would get collective bargaining rights, something Democrats have wanted and Republicans have opposed.

Meanwhile, as lobbyists lined up outside the chambers of the Assembly and Senate and buttonholed lawmakers to make their final pitches on scores of bills, the Senate spent the day methodically voting on its remaining measures.

The Senate easily approved a bill requiring all public school students in grades 2 through 11 to take a basic skills tests this spring as demanded by the governor.

In the far more unruly Assembly, lawmakers spent much of the day mired in internal debates--a situation they found themselves in repeatedly during the year.

Pending before the lower house were bills ranging from the child health care package to the basic skills test for the bulk of the state's 5.5 million students.

Late Friday, Sen. John Vasconcellos (D-Santa Clara) said he would put off until next year a vote on a bill stalled in the Assembly that would require a state study on whether marijuana is medicinal.

Assemblyman Don Perata (D-Alameda) said he dropped plans to put to a vote his bill to strengthen California's law banning semiautomatic assault weapons, saying he lacked the 41 votes needed to pass the measure. He will take it up in January when lawmakers return.

The day's most significant accomplishment came when the Senate easily approved the package of two health care bills. Backers in the Assembly were expected to beat opponents' attempt to block its passage in the lower house. Kim Belshe, Wilson's health director who helped negotiate the deal with the Democratic-controlled Legislature, hailed its apparent passage, calling it "the biggest expansion of health care for low-income kids since Medicaid," a reference to the federal program that began in 1965 as part of President Lyndon Johnson's Great Society.

"The bottom line is that this is an unprecedented expansion of health care for kids of the working poor," Belshe said.

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