3 Ballot Initiatives Seen Adding to Fiscal Problems : Finance: Experts say approval of Propositions 128, 129 and 134 would increase state costs $460 million the first year, $900 million the next.

SACRAMENTO —  The state budget, already heading toward a sea of red ink, would take on an additional $460 million in costs if three initiatives dealing with the environment, law enforcement and the alcohol tax are approved by voters, a legislative budget committee learned Friday.

Finance Director Jesse R. Huff, in a briefing to the Joint Legislative Budget Committee, said the new costs would come from spending requirements contained in Proposition 128, the so-called “Big Green” initiative; Proposition 129, a drug enforcement and prison bond measure; and Proposition 134, the “nickel-a-drink” alcohol tax proposal.

Huff said the cost of the three initiatives would nearly double next year, soaring to $900 million.

Although the propositions include increases in taxes or fees to pay for mandated programs, the new revenues will not cover all the costs, Huff and other experts said.

Various tax increase proposals contained in Proposition 129 have already been enacted by the Legislature and the money is being used to finance non-law enforcement programs. So support of the programs called for by the law enforcement measure would have to come from general purpose tax revenues.

In the case of Proposition 134, the tax increase on alcoholic beverages would generate at least $500 million a year in new revenues. But that money is earmarked for special programs and cannot be used to support general state programs. At the same time, the measure mandates minimum levels of state financial support for a wide variety of health and welfare programs, so money for those programs would have to come out of general purpose tax revenues.

Huff complained that initiative sponsors did not focus “on the big picture,” or the state budget as a whole. “No one has bothered, in thinking of these initiatives and drafting them, how that fits into the context of our budget situation,” Huff said.

Legislative Analyst Elizabeth G. Hill, while falling generally in line with Huff’s estimates on the cost of the three propositions, told the committee that annual interest and principal payments on the 14 bond measures on the ballot would be more than $450 million if all are approved.

The money to pay the additional costs during the current year would come from the budget reserve--and in future years from general tax revenues used to finance school, human services and law enforcement programs.

Gov. George Deukmejian’s budget for the 1990-91 fiscal year, which began last July 1, anticipated a $1.3-billion reserve.

But in reality the reserve may only be half that and seems to be shrinking almost weekly. Tax collections on which the governor based his reserve figure were already $138 million less than expected after only three months into the fiscal year. And the governor’s budget counted on the state ending the last fiscal year with $700 million left in the reserve. A preliminary accounting by Controller Gray Davis indicated that the balance was closer to zero.

Hill told the committee that the budget problem was not going to get easier soon.

She said current expectations are that next year’s budget will be at least $1.1 billion short of what will be needed to cover state services. Hill said: “We think these estimates are very conservative. (The gap) could very well grow.” She said the $1.1-billion estimate did not take into account the effects of the crisis in the Persian Gulf, the weakening of the national economy since August or ballot measures that may pass in the Nov. 6 election.

Hill also told lawmakers that the various budget problems and a change in the California Constitution approved by voters in June have left the state roughly $2.7 billion below the state spending limit. As legislators were quick to note, that means the Legislature could raise taxes by that amount.

“So, if the chairman wanted to raise taxes, he could, I guess,” said Sen. Robert G. Beverly (R-Manhattan Beach).

“The chairman” he referred to is Sen. Alfred E. Alquist (D-San Jose), head of the budget committee. Alquist each year carries a major tax bill, but in recent years he has been stymied both by the political climate in the Legislature as well as the spending limit.