Budget Deal Resisted by Republicans : Government: Assembly members call for more long-term cuts than Wilson and other lawmakers are discussing. Democrats jockey to have preliminary package drafted.

SACRAMENTO —  Assembly Republicans threw cold water Monday on what appeared to be a consensus developing among Gov. Pete Wilson and legislative leaders over a combination of tax increases and spending cuts necessary to wipe out the state’s $14.3-billion budget deficit.

Assembly Republican chief Ross Johnson of La Habra emerged from a leadership meeting Monday saying that GOP lawmakers in his chamber want more extensive long-term cuts than budget negotiators seem to be contemplating.

“We want to see a lot more in the way of structural changes in government, permanent changes that reduce the burden on taxpayers of California. So far in these discussions, we are not seeing that,” Johnson said during a midday break in negotiations with Wilson and Democratic leaders.

Later in the day, all 31 Assembly Republicans sent Wilson a letter declaring that they would require more budget reforms before they could consider voting for a tax increase.

Assembly Republicans are believed to control enough votes to keep a budget plan from getting the 54 votes--two-thirds of the chamber’s 80 members--needed for passage. Johnson gave them a private briefing after leaving the governor’s office. The GOP lawmakers emerged from the session as defiant as ever.

Assemblyman William P. Baker (R-Danville), who along with Johnson is a lead GOP budget negotiator in the Assembly, said Republicans in his chamber would attempt to block passage of even a preliminary budget plan “until we see an agreement” that spells out all the tax increases and spending reductions contemplated by Wilson and Democratic negotiators.

A preliminary budget would face much better prospects in the Senate, where Democrats are just one vote short of a two-thirds majority.

Democrats announced plans to put legislative budget committees to work today drafting a preliminary version of a $55-billion-plus budget for the 1991-92 fiscal year that begins July 1. The schedule calls for a vote on the budget bill in the Senate on Wednesday, a move to bypass the lower house at least temporarily. That vote would be a procedural move designed to set up a two-house conference committee, composed of six lawmakers, that would draft a final budget agreement.

By creating the conference committee Wednesday, lawmakers conceivably could have a final budget plan ready for a vote Friday, the target day set by Wilson for having the overall plan adopted by both houses.

Wilson wants the plan approved by then to ensure that increased tax revenues will start coming in, as contemplated, July 1. If the plan is not in place, the state stands to lose at least $400 million in increased sales taxes and vehicle license fees in July. Wilson, in a $7-billion tax increase package, is proposing to raise the state’s 6% sales taxes by 1 1/4%.

Baker said the danger of approving a preliminary budget plan is that “we give false hope to everybody that there is an agreement coming when there isn’t.” He said Assembly Republicans did not trust the conference committee to come up with a fair plan.

“The conference committee is not going to make those tough decisions,” he said.

Baker predicted that problems would develop when legislators got full briefings on the magnitude of the tax increase package being considered by Wilson and legislative leaders. “Most of the members are not involved in the budget process yet. They do not realize what these taxes are going to do to their constituents,” Baker said.

So far, Democrats have been silent on what agreements, if any, have been made during a series of private meetings with Wilson. The governor and four legislative leaders--Johnson, Assembly Speaker Willie Brown (D-San Francisco), Senate President Pro Tem David A. Roberti (D-Los Angeles) and Senate Republican Leader Ken Maddy of Fresno--spent most of Monday working together in Wilson’s office on the budget plan. The five have agreed not to reveal any details until a plan is finalized.

The GOP lawmakers’ comments came on a day when the Commission on State Finance reported to the Legislature that it sees an end to the recession this summer. The commission said it believes the economic recovery will mean at least $800 million in additional tax collections to offset the deficit.

“We estimate that the funding gap is $13.5 billion, about $800 million lower than (Wilson’s budget plan),” said Kevin L. Scott, executive secretary of the nonpartisan commission.

Scott, in a briefing to the seven-member panel, said the commission’s economists believe the state will take in about $1 billion more than the Wilson Administration expects during 1991-92, but that expenditures will be about $250 million higher.

The head of the commission, Democratic Treasurer Kathleen Brown, said she is getting anxious about the lack of progress on a budget deal. “There is no reason politically, fiscally, economically or practically to delay this budget,” she said after the meeting.

“They have to raise taxes and they have to cut programs, right?” she said of Wilson and the Legislature. “Somebody told me once when I went on a bit too long in a speech: ‘If you have to swallow a frog, don’t take a long time looking at it.’ These people have to swallow a frog. Why delay and delay and delay when all that it is going to do is add more costs to already overburdened taxpayers?”

Brown warned that “we are running into a major cash flow problem. . . . We have a $3-billion budget shortfall at the end of this month.”

Brown said short-term borrowing is possible to bridge the cash flow problem if there is no budget deal, but only at a tremendous price to taxpayers, both in interest costs and a likely reduction in the state’s AAA bond rating that allows the state to borrow at the lowest rates available.

One source close to the negotiations said there is still “a possibility” of reaching a budget agreement by Friday despite Republican opposition in the Assembly.

“We are a long ways away yet. It’s hard to say. One hour I think we are close. The next hour I don’t think so,” the source said.