Wilson Yields on Prop. 98 Curbs : Budget: Governor abandons effort to suspend guarantees on school funding, saying that the stalemate is slowing work on completion of a spending plan.

Trying to jump-start state budget negotiations, Gov. Pete Wilson on Saturday formally abandoned his quest to suspend Proposition 98, the voter-approved constitutional protection for public school funding.

Instead, the Republican governor lobbied lawmakers to pass a new education finance plan that would give public schools the $18.4 billion guaranteed by Proposition 98 and also provide them with an additional $400 million. The package leaves schools with $800 million more than Wilson had proposed in January.

Wilson said he changed his strategy because he was “very much concerned that education be properly funded.”

The governor, unable to overcome the strong lobbying of the California Teachers Assn., also acknowledged that he lacked the votes to suspend Proposition 98 and that the stalemated fight over the education finance issue was slowing progress on the rest of the budget.

He said his change in position was “necessary to advance the budget process.”

Until now, Wilson and the Democratic and Republican leaders of the Legislature have been unable to make much progress on what they hoped would be a $55-billion budget compromise for the fiscal year beginning July 1. The leaders said they hope that by removing education--the biggest single part of the budget--from the table, they will be able to more easily resolve the remaining elements, including tax increases and welfare cuts.

“It is no exaggeration to say that this education solution is the critical element--the linchpin--of the budget agreement,” Wilson said in a prepared statement.

Ironically, Wilson’s decision to preserve Proposition 98 was made easier by the same worsening economic conditions that have helped create a $14.3-billion state budget shortfall. As tax revenues declined this year, so did the gap between what schools were guaranteed under Proposition 98 and what Wilson was willing to give them.

So while the governor’s switch represented a victory for schools, the triumph was not as large as they originally might have anticipated. Almost as important as the financial gain in many educators’ minds, however, is the precedent of keeping Proposition 98 intact.

Wilson explained the plan to Assembly Republicans in a private session Saturday morning. When he emerged, the governor said he hoped he had “changed some minds” among Republican lawmakers who had been reluctant to support the package.

Wilson’s proposal--originally developed by Senate Republican Leader Ken Maddy of Fresno--won the backing of many of his Republican colleagues in the Assembly. But some Democrats balked, forcing Wilson to settle for only a procedural move amending the package into two bills for consideration today.

The package would give public schools--kindergarten through community college--$18.4 billion for the next fiscal year. That is the amount guaranteed by Proposition 98.

But the complex plan also would require schools to repay the state for $1.2 billion they received during the current fiscal year but weren’t entitled to because of the weak economy. Still, that would leave the schools with about $400 million more in state aid than Wilson originally proposed.

In addition, the plan would reduce the schools’ spending requirements by another $400 million--leaving them $800 million better off than the governor had recommended in January.

The schools’ spending would be reduced by repealing a requirement that they pay counties $100 million a year for the cost of collecting property taxes and allow them to skip $300 million in payments to non-teacher retirees whose pensions are not keeping up with the cost of living.

The snag came when education lobbyists meeting in Assembly Speaker Willie Brown’s conference room opposed the pension provision.

Joe Holsinger, a lobbyist for state schools Supt. Bill Honig, said the schools were “gratified” that Wilson agreed not to suspend Proposition 98.

“It’s a sign of him wanting to be cooperative, and we want to be cooperative in return,” Holsinger said. But he asserted that the pension proposal would be a “severe blow” to school employees.

“They’re protesting rather vigorously,” he said.

Brown refused to explain why the plan was not voted on Saturday by the Assembly but said it was up to the governor to decide the timing of the vote.

“I assume that he would be wise enough to call (for a vote) when he could win it,” Brown told reporters.

But Wilson, without blaming either party, reacted to the delay with harsh words. Every day that a full budget solution is not in place costs the state money because of lost tax revenues and budget cuts not implemented, he said.

“They’ve got to come to grips with reality,” Wilson said of the Assembly. “It won’t become any less unpleasant by ducking the issue. What will result is jeopardizing the whole budget solution and at the very least cause the loss of $11 million a day.”

Wilson’s statement reflected strong disappointment in the pace of budget negotiations, which he originally had hoped would be wrapped up by May 15. Only a week ago, the governor had expressed optimism that an entire spending and tax package would be completed by Friday. But on Friday night, Wilson and legislative leaders gave up trying to negotiate one complete budget compromise and decided to tackle their problems piecemeal, starting with education funding.

Referring to the school funding plan, Wilson warned: “If it doesn’t pass, I think we will find the whole (budget) process set back substantially.”

Senate President Pro Tem David A. Roberti (D-Los Angeles) said the Senate would meet today to consider the education funding package.

The Assembly, meanwhile, passed a draft of the budget and sent it to the Senate in a procedural move that will lead to the creation of a two-house conference committee to write the final spending plan. But the conference committee is expected to simply ratify whatever is agreed to by the governor and legislative leaders in their closed-door meetings.