Wilson Signs $52.1-Billion Budget On Time

SACRAMENTO — With only hours to spare before the start of the new fiscal year, Gov. Pete Wilson late Wednesday signed a $52.1-billion state budget that will reduce spending while shifting a large portion of the state’s financial problems onto local governments.

Wilson signed the 1993-94 spending plan a few minutes after 9 p.m., shortly after the state Assembly passed the final pieces of a multi-bill legislative package needed to bring the budget into balance.

“This is the part I like the best--the date--June 30,” Wilson said as he signed the first budget to be approved on time since he has been in office. The last time California’s budget was in place on time was 1986.

The governor described the spending plan as “a realistic budget for hard times.”

With no debate, the Legislature’s lower house cleared its last major obstacle when it voted to suspend the renters’ tax credit for two years and place a companion measure on next June’s ballot that will allow voters to reinstate the credit and make it part of the state Constitution.

“Congratulate yourselves,” Assembly Speaker Willie Brown (D-San Francisco) told the members of the Legislature’s lower house after they completed action on the budget package before the start of the fiscal year.

Brown said the timely passage of the budget was in part a reaction to last year’s summer-long deadlock, which forced the state to pay its bills with IOUs. He said the governor and legislators, stung by criticism over their performance a year ago, were determined to have a budget in place for the start of the fiscal year today.

“The public demanded it,” he said.

The budget protects spending for prisons and public schools while cutting or freezing almost every other major state-supported program. It stretches out repayment of the year-end $2.7-billion deficit over 18 months and cuts the state’s general fund spending for the second consecutive year after half a century of increases.

But this year’s reduction in state spending reflects a $2.6-billion shift of property taxes from cities, counties and special districts to schools. The transfer will save the state $2.6 billion it otherwise would have been obligated to give to education from its treasury.

To help local governments survive that loss of revenue, the state extended a temporary half-cent sales tax for six months and gave the revenue--about $744 million--to counties and cities. In November, voters will be asked to make the half-cent tax a permanent source of money for local governments.

The Legislature also passed bills to lift an estimated $500 million in state-ordered obligations from local governments. The most significant was a measure allowing financially distressed counties to cut local welfare payments to single adults by up to 27%.

Among state programs, health and welfare services will get a 1.3% increase over last year’s funding, far short of what would be needed to serve the growing number of poor and sick people seeking state assistance. As a result, welfare grants are to be cut 2.7%, as will aid to disabled, blind and poor elderly people.

Budgets for higher education will be frozen, leaving universities and community colleges without enough money to meet their growing demands. To compensate, the University of California system will raise fees 22% and the California State University system will levy a 10% increase. Community college students will pay 30% more next year than they did in the academic year that just ended.

Although the budget bill has been on Wilson’s desk for nine days, the governor said he would not sign it without the accompanying legislation needed to make it balance.

The last piece of that package was the bill to suspend the renters’ tax credit for two years, saving the state $400 million annually. The Assembly passed such a measure more than a week ago, but Democrats in the state Senate refused to go along.

After more than a week of negotiations, Senate President Pro Tem David A. Roberti (D-Van Nuys) brokered a deal to give new life to the modest benefit that goes to millions of California tenants each year.

The agreement suspends the credit for two years but allows voters the chance to reinstate it and place it in the state Constitution, where it would be safe from legislative repeal.

Roberti argued that the renters’ credit, which is worth $60 to individuals and $120 to many couples, deserved the same protection as the homeowners’ property tax exemption, which already is part of the Constitution.

Until Roberti stepped in, the Legislature was set to suspend the credit for two years and review it in 1995, when legislators again would probably have been under pressure to eliminate it.

When the first bill to suspend the benefit cleared the Assembly last week, Brown said renters were an easier political mark than homeowners because tenants move often and cannot be counted on to vote in legislative elections.

Under Roberti’s proposal, the voters will decide next June whether to make the credit permanent. It would still be up to the Legislature to determine which renters would be eligible for the benefit.

Currently, the credit goes to individuals with incomes under $20,500 and couples who earn less than $41,000.

Times staff writer Carl Ingram contributed to this story.

State Budget Watch

With only hours left before the end of the fiscal year, the s e were the final developments in Sacramento:

THE PROBLEM: The state will end the year with a $2.8-billion deficit and faces a $9-billion gap between anticipated tax revenues and the amount needed to pay off the deficit and provide all state services at the current levels for another 12 months.

THE LEGISLATURE: The Senate and Assembly completed passage of all budget-related legislation. Final legislative action took place in the Assembly, where calls to convene floor sessions were repeatedly postponed throughout the day while Speaker Willie Brown and other legislative leaders ironed out differences, mainly over suspending the renters tax credit. Final votes took place in the early evening.

GOV. PETE WILSON: Wilson signed the budget just after 9 p.m.

KEY DEVELOPMENTS: The last hang-up came down mainly to the renters tax credit issue. As finally passed, the measure calls for a two-year suspension of the credit to low-income renters, to be restored thereafter as a constitutional amendment, pending a popular vote.