Democrats Still Push for Tax Hike in Budget Battle

SACRAMENTO — On the day that the Legislature hit--and once again missed--its deadline to complete work on a new state budget, a handful of Democratic lawmakers were still trying Wednesday to build support for tax increases to avoid making $800 million in budget cuts.

Assemblyman John Vasconcellos (D-Santa Clara), chairman of the budget-writing Assembly Ways and Means Committee who is pressing hard for a tax increase measure, said Democrats and Republicans are so badly divided on budget issues that a deadlock has developed.

“The budget’s off track,” said Vasconcellos, who has been joined in his bid for tax legislation by a handful of Democrats in the Assembly and Senate and state Supt. of Public Instruction Bill Honig.

Later, the budget was defeated, 39 to 36, in a raucous floor session.

Four Democrats and 35 Republicans voted in favor, but they fell well short of the necessary 54-vote, or two-thirds majority, needed to send the spending plan to the Senate. All the “no” votes were cast by Democrats, who said they were refusing to vote for the budget because of a Republican amendment that would prohibit state funds to be used to pay for abortions for poor women, except in special cases, such as when a pregnancy endangers the life of the mother.

Meanwhile, Democrats have put a $350-million appropriation to counties to cover the cost of running local courts high on their list of possible budget cuts. A Los Angeles County official said the county could lose $125 million to $135 million if the cut goes through, a move that would affect virtually every county department.

Orange County could lose about $20 million and San Diego County $30 million if the Legislature postpones implementation of a trial court funding program as part of a budget-cutting effort. But neither county has yet decided to take advantage of that funding.

Vasconcellos, before the budget vote, spoke to several hundred county officials from around the state, warning them that unless increased tax revenues are found, the budget will contain painful reductions in spending.

Earlier Mistake

“The tax proposal is one way to deal with this problem. The other way is to cut programs,” said Vasconcellos, who calls his proposal a correction of an earlier mistake.

The county officials met in an old movie theater near the Capitol. The lobby was draped with banners that proclaimed opposition to the budget cuts, with such slogans as “Save Libraries” and “Save County Hospitals.”

Vasconcellos and Honig say they would rather gamble with a late budget than see a spending plan passed now that would force dramatic reductions in education, health and other programs.

Honig, who said he favors raising the top income tax rate from 9.3% to at least 10.3%, declared: “If they give the budget to the governor the way it is written, then he will make $800 million in cuts. I’d rather see them hold the budget up and work things out.”

For his part, Gov. George Deukmejian, who first proposed tax-increase legislation then dropped it because of political opposition, again said he sees no chance of tax legislation being passed this year.

“There won’t be votes this year for any tax increases,” Deukmejian told reporters during an impromptu news conference.

Later in the day, Vasconcellos helped block action on the proposed $45.1-billion budget when it was brought up for its third vote in the Assembly in the last two weeks.

Vasconcellos, the author of the budget, called the spending plan up for a vote but then defiantly refused to vote for it because of the cuts that it would require.

That seemed to set the tone for the day. Before the session was over, lawmakers were calling each other names and demanding that colleagues be arrested or, in one case, be censured for using profanity.

The censure motion was made by Assemblyman Steve Peace (D-Chula Vista), who also demanded that Assemblyman Richard E. Floyd (D-Hawthorne) apologize for calling Deukmejian “the most hard headed s.o.b. in this building” and other names. Floyd refused to apologize, answering the demand with an obscene gesture.

Ultimately, Assembly Speaker Willie Brown (D-San Francisco) ruled Peace’s motion out of order, but the ruling, in turn, led to a prolonged series of parliamentary rulings and challenges that left the session in a shambles.

Republicans and Democrats blamed each other for the late budget.

Assemblyman Tom McClintock (R-Thousand Oaks) challenged Democrats to back up their words by staying in session all night. To embellish his challenge, McClintock led rebellious Republicans in the defeat of a motion to adjourn the session.

When it became apparent that there were not enough lawmakers left to conduct any serious business, McClintock demanded that Brown send out the State Police with orders to round up and arrest the missing lawmakers.

Finally, the legislators tired of the battle and adjourned for the day, about five hours after they began the session. They are scheduled to take up the budget again Monday.

Wednesday marks the seventh time in the last 11 years that the Legislature has missed the deadline. Lawmakers suffer no penalties for doing so and thus feel little pressure to finish on time.

Even after the Assembly budget passes, it simply moves the debate to a different forum. The budget, after it leaves the Assembly, will go back to the Senate for a procedural vote and then to a two-house conference committee. The conference committee will hammer out differences between Senate and Assembly versions of the budget.

At this point, the two versions of the budget in the Legislature are at least $1 billion higher than the budget proposed by Deukmejian.

The budget problem has its roots in 1987 tax legislation that dropped the top income tax rate from 11% to 9.3%. Last year’s tax legislation was designed to be revenue-neutral, meaning that the drop in tax rates was supposed to be offset by adjustments elsewhere in the tax law that would raise taxes by the same amount that they were being reduced. The problem is that calculations by tax and budget officials were off by an estimated $1 billion a year.

“Nobody ever meant for that to happen,” said Honig, who sent a letter on Tuesday to the governor and members of the Legislature in the hopes that he will rally support for passage of a tax bill that would push the top income tax rate back up to at least to 10.3%.

Vasconcellos is sponsoring an $800-million tax plan that contains most of the same elements that Deukmejian put into his earlier tax proposal.

Picking up the ball dropped by Deukmejian, the tax-increase advocates are concentrating their arguments on the damage that $800 million in budget cuts would do to state programs.

Vasconcellos, in an open letter to the news media, said he is “perplexed and disappointed” that the press has concentrated on the politics of the tax increase while ignoring “the real issues.”

Times staff writer Daniel M. Weintraub contributed to this story.