Senate OKs Bills to Fund Schools : Budget: Full financing would be guaranteed as required by Proposition 98. Measures meet resistance in the Assembly. Showdown is delayed.

SACRAMENTO —  Taking the first big legislative step toward resolving the state’s $14.3-billion budget deficit, the state Senate on Sunday passed three bills that would guarantee full financing of public schools and overhaul the financial structure of Municipal and Superior courts.

Passage of the legislation during a rare Sunday session left budget negotiators pleased, even though the proposals for school funding met stiff resistance in the Assembly. The lower house rejected similar bills Sunday, in effect putting off until later a showdown on the measures passed by the Senate.

Two school funding bills, which would fulfill the funding obligations to public schools and community colleges called for by Proposition 98, passed on identical 34-0 Senate votes, winning support from Democrats and Republicans. The trial court legislation, which would save the state $295 million next year and make sweeping changes in the administration of the courts, passed 32 to 1.

“I feel much better today,” said Senate Republican Leader Ken Maddy of Fresno, who had been locked in closed-door talks with Gov. Pete Wilson and other legislative leaders that seemed to be making little progress just days ago.

Wilson, who has been pressing the Legislature for action, praised the Senate vote.

Although he originally fought hard to suspend school funding guarantees contained in Proposition 98, Wilson called passage of the education bills a “win-win for virtually everyone.”

“I’m encouraged by the progress in the Senate. I’d like to see the Assembly be similarly responsible and get hot, start moving. We’re losing money every day that they delay,” Wilson said.

The Wilson Administration is estimating that the state loses $11 million with each day that goes by without legislative approval of his budget plan.

Budget negotiators said the toughest hurdle for them to clear was developing a consensus on school funding.

The two school funding bills passed by the Senate would give schools $18.8 billion to spend in the new budget year, about $800 million more than Wilson initially said he wanted to give schools.

Under one of the bills, school districts would be freed of requirements that they reimburse counties $134 million for administrative costs associated with property tax collections. Furthermore, they would be freed from an obligation to put $299 million into non-teacher pension funds. The pension fund contributions would come instead from surplus investment funds building up in the Public Employees’ Retirement System.

Under the second bill, a complex plan was approved that would require schools to repay the state for $1.2 billion they received during the current fiscal year but were not entitled to because of a slumping economy. Even so, schools would come out ahead of the funding levels that Wilson first proposed.

School officials said the budget allocation approved by the Senate would help them keep up with enrollment growth. They also said, however, that they need a 5% funding increase to keep up with inflation; without it, some layoffs probably still would be needed.

Community college officials said that even with the funding they might have to turn away as many as 50,000 students.

The other major bill passed by the Senate would gradually shift responsibility for funding courts from counties to the state. The chief savings would come from doing away with subsidies that the state provides to counties to keep the courts running. Instead, the process would be streamlined by placing all funding under one administration, leading to savings in future years.

Sen. Alfred E. Alquist (D-San Jose), chairman of the Senate Budget and Fiscal Review Committee, said passage of the three bills was “a significant step forward in arriving at a consensus on the budget bill.”

Many issues remain before the Legislature can pass the proposed $55-billion budget in time to meet its June 15 constitutional deadline and have a spending program in place by the July 1 start of the 1991-92 budget year.

Still to be resolved are the level of tax increases that will be needed to finance the proposed budget, and which taxes will be increased.

Wilson initially proposed a $7-billion package of tax increases that would raise the basic 6% sales tax by 1 1/4 cents as well as sharply increase motor vehicle license fees; boost taxes on liquor, beer and wine; extend the sales tax to candy, snack food, newspapers and magazines, and broaden income tax withholding requirements for contractors and others.

Democrats have accepted most of the governor’s tax plan, and are pushing additional taxes of their own.

Senate President Pro Tem David A. Roberti (D-Los Angeles) said the sudden movement by the Senate reflected budget agreements that had been formulated over the last week or so.

“This has been sort of circular decision-making,” he said. “It’s been decided in conferences, and meetings with the governor, the leadership meetings, on the telephone, staff running about. I would be hard-pressed to pinpoint any one meeting where it all came together.”

While the Senate was passing budget bills, Republicans and Democrats in the Assembly spent most of the day fighting.

After bitter partisan debate, the Democratic-controlled Assembly voted down Republican versions of school funding legislation. But the Assembly will have another chance to vote on education bills as early as today when the two measures approved by the Senate arrive.

The bickering began when the Assembly took up another major piece of the budget puzzle: a package of bills that would shift responsibility for all state mental health programs, including state mental hospitals, to the counties. In addition, counties would also assume responsibilities for special health services for the poor and a number of social service programs.

The sweeping program also calls for $2.1 billion in tax increases--part of Wilson’s $7-billion tax package--to reimburse counties for the additional costs.

Although the governor and legislative leaders have agreed to the plan in concept, Assembly Republicans have balked at passing the proposals and on Sunday spent hours debating the legislation in a closed-door meeting with Wilson Administration officials.

During the floor debate, Assemblyman Bruce Bronzan (D-Fresno) urged colleagues to vote for one county funding bill, saying, “It represents the biggest change in relations between state and county governments in our history.”

Assemblyman Pat Nolan (R-Glendale) countered: “This is a thinly disguised tax increase. This is a boneheaded approach. This makes no sense.”