Deukmejian Proposes Budget of $36.7 Billion : Balanced Spending Plan Puts Emphasis on Education, Toxic Cleanup, Prison Construction

SACRAMENTO —  Gov. George Deukmejian unveiled an optimistic election-year budget proposal Friday that calls for spending $36.7 billion in state funds during fiscal 1986-87 and increasing financial support for his top priorities--education, toxic waste cleanup and prison construction.

Deukmejian offered a balanced plan that would boost state spending by about $856 million over the current year, an increase of 2.2%, without raising taxes.

The Republican governor, who is up for reelection in November, proposed maintaining the status quo for most programs, while beefing up the state’s reserve for “emergencies” from $817 million to $1.16 billion.

When added to nearly $15 billion in federal funds that California expects to receive and spend, Deukmejian’s budget anticipates record total expenditures of $51.5 billion.

“We feel it is a leadership budget for America’s leadership state,” the governor said, echoing a new campaign theme during a brief appearance before reporters.

“It completes the change in priorities that we started three years ago, moving California away from welfare dependency and excessive bureaucracy toward education, job creation, public safety, toxic cleanup and fiscal responsibility.”

For the most part, legislators withheld comment Friday while they studied the proposal in detail. But Assembly Speaker Willie Brown (D-San Francisco) accused Deukmejian of “mismanagement” and “bungling” in preparing the budget.

The governor’s plan will be subjected to major review and modification by the Legislature during the next six months as it attempts to meet a June 15 deadline for passage of a budget. The 1986-87 fiscal year begins July 1.

Deukmejian made no allowance in his proposal for potential major reductions in federal aid that could result from federal deficit-cutting under the new Gramm-Rudman measure. State Finance Director Jesse R. Huff said the Deukmejian Administration would await developments in Washington before deciding what budget-cutting adjustments to make.

Neither does the governor’s budget set aside any money to finance programs developed by the Legislature in the coming months--unlike last year when Deukmejian offered $75 million for legislative “initiatives.”

It does not even set aside funds for one of the governor’s own projects that he promised to spell out later: more money for research to combat AIDS.

Huff cautioned that any move by the Legislature to increase funds for one program would result in reducing money for others.

And, Huff said, the governor does not intend to dip into the reserve to finance new programs or add to old ones, as he did last year to the tune of nearly $300 million.

Deukmejian’s budget and his Administration’s revenue forecast are based on an optimistic estimate of how the state and national economies will perform during the last half of 1986 and the first half of 1987.

Although some financial analysts are predicting a flattening of the economy later this year, the state Department of Finance is anticipating robust economic growth during the next fiscal year, and consequently, significant revenue increases.

Under the Deukmejian budget, the lion’s share of state spending would be devoted to education, with 55% of the state’s day-to-day general operating fund going to schools, colleges and universities.

$17 Billion for Education

Deukmejian proposed spending $17.1 billion in state money on education. State spending on kindergarten through 12th grade would increase by $1.1 billion to a total of $12.1 billion, a 9.2% increase.

However, most of that K-12 money will merely keep the schools even with the increase in the cost of living and a dramatic jump in school enrollment. About $331 million of the increase is revenue from the state lottery, which was approved by the voters over Deukmejian’s opposition.

In the politically sensitive area of toxics, Deukmejian called for the expenditure of $10 million more and the addition of 137 staff members to aid in efforts to safeguard the public from hazardous wastes.

Deukmejian, whose toxics program has been criticized by Democrats as ineffective, proposed increasing enforcement of pesticide regulation, replacement of leaking underground storage tanks, inspection of state-owned land and identification of toxic air contaminants.

‘Substantial Increases’

“This budget continues the substantial increases we have been providing for toxic cleanup programs,” Deukmejian said.

The governor proposed 4.9% increases in monthly living allowances for welfare recipients and persons receiving benefits for the aged blind and disabled. A family of three that receives Aid to Families with Dependent Children would see its grant rise from $587 to $616 under the governor’s proposal.

Overall, the governor is calling for 5.4% increases in health and welfare programs.

“We have $10.6 billion in this budget earmarked for programs to serve the poor the sick, the elderly, the disabled,” Deukmejian said. “So I think that demonstrates our continued commitment and the commitment of all Californians for helping these citizens who are afflicted and cannot assist themselves.”

The budget earmarks $45 million to pay for the first year of the bipartisan workfare program approved last year in which able-bodied recipients must work or go to school in exchange for their benefits. Although the program will not fully go into effect for five years, Huff said he expects it to save $36.5 million in its first year.

Prison Staffing

Reflecting a proposed dramatic increase of 4,700 new positions in staffing levels at state prisons and correctional facilities, the overall size of the state work force would grow by about 2,020 jobs to 233,098 under the budget.

The governor, in all, is proposing a 21.6% increase in Corrections Department spending, which would go from $1 billion to $1.2 billion.

The Administration is in the midst of a prison expansion program aimed at adding 23,362 new beds to the prison system over the next two years. The new budget anticipates that the state will have to house 5,535 new prisoners next year, which would bring the total inmate population to 58,000 by June, 1987. In June, 1981, there were only 27,000 inmates in the state system.

Much of the prison construction program was financed with bonds contained in last year’s budget. The budget unveiled Friday represents a reduction of about $1 billion in spending derived from bond funds, a significant factor in keeping overall budget growth to 2.2%.

Significant Drop-Off

Another area where there is a significant drop-off in proposed spending is the Public Employees’ Retirement System. The governor proposed a $100-million cut in the state’s contribution, saying that this was justified because of the exceptionally good performance of the pension system’s investment portfolio.

Deukmejian, who has come under fire for snafus in the Department of Motor Vehicles, asked for an immediate mid-year $6.3-million increase in the agency’s budget. Legislators had criticized the governor because of long lines at DMV offices and failed efforts to fully automate licensing and motor vehicle registration.

The governor’s budget calls for an increase of nearly 700 DMV staff positions next year.