Good-News State Budget Won’t End Partisan Fights

SACRAMENTO —  For the first time since he took office five years ago, Gov. Pete Wilson will introduce a state budget next week that distributes the bounty from a cash surplus instead of trying to make up for financial shortfalls.

The document officially marks the end of a time in Sacramento when fierce partisan showdowns erupted over the controversial tax increases and painful cutbacks required to survive a recession that eliminated more than 700,000 California jobs and nearly a third of the revenue that paid for government operations.

“California is back,” Wilson declared in a year-end statement. “With more Californians back at work and state revenues well above original projections, we have a great deal to be proud of and grateful for this year.”

Despite the good news, however, life in the California Legislature is hardly expected to be any friendlier. Instead, lawmakers have already picked a host of new issues to fight about.

Heading into a high-stakes election year, Democrats are trying to link Sacramento Republicans with the unpopularity of U.S. House Speaker Newt Gingrich. And Republicans, eager to cast their opponents as the state’s big spenders, contend that they are the only party that wants to share the good economic fortune with voters through a cut in state income taxes.

“It will still be a hard-fought battle,” said Assembly Democratic Leader Richard Katz (D-Sylmar). “There are many in the Republican caucus who want to do for seniors in California what Newt Gingrich did in Congress.”

Assemblyman Wally Knox (D-Los Angeles) added: “The Democrats’ primary mission in the Assembly will be to prevent Gingrich-style programs from going through.”

Ultimately, when the Legislature convenes its 1996 session today, the biggest question may be whether it will be frozen by partisan bickering or will be able to reach a consensus on several major issues it will consider--such as welfare reform and tax cuts.

The two sides are almost equally matched. The Assembly is split almost in half. Democrats run the Senate. And a Republican serves as governor. As a result, should the year deteriorate into election-year grandstanding, the two parties will find it hard to pass their own laws and much easier to block those of their opponents.

Preparing for the worst, one GOP aide predicted that Republicans are ready to blame Democrats for the Capitol’s lack of productivity. They “will promote gridlock and, from the Republican perspective, become the obstructionists of positive change,” he said.

Speaker Dispute

In the Assembly, the lines are likely to be drawn within the first hours of the new legislative session because Republican lawmakers are attempting to enlist the support they need to oust Speaker Brian Setencich (R-Fresno), a moderate freshman who broke ranks with GOP loyalists and was elected to the leadership with the unanimous support of Democrats.

The Assembly Republican caucus scheduled a meeting for today in which it will discuss the party’s leadership. Importantly, after largely keeping his hands out of the Republican leadership discussion last year, Wilson is expected to attend today’s caucus meeting and encourage GOP unity.

On the eve of the meeting, Setencich critics were threatening to launch an early showdown vote while the speaker’s aides were predicting that he had won the support of enough Republicans to remain in office--at least for the start-up of the new session.

Setencich has appealed to fellow Republicans in recent weeks, asking that they move on with state business and not continue to freeze the Assembly in a divisive power struggle. In the process, he has made several promises to his colleagues, including a pledge to install a Republican majority on the influential Assembly Rules Committee.

Last week, it appeared that Setencich’s work had peeled at least one supporter from the GOP caucus--possibly enough to keep his office. One additional GOP supporter, added to the Assembly’s 37 Democrats and one Reform Party member, would give Setencich 40 votes in the 79-member chamber.

The arithmetic would appear to deny the office--at least for now--to rival Assemblyman Curt Pringle (R-Garden Grove), who has tried to rally GOP caucus support to replace Setencich. On Tuesday, Setencich said once again that he is confident of holding his office when the Legislature convenes.

Still, throughout the Capitol, there is widespread consensus that the acrimonious Assembly power struggle that dominated the lower chamber’s attention during the last year will continue in 1996.

At the same time, the Democratic caucus is undergoing a profound leadership transition after the forced retirement of many veteran lawmakers under a 1990 term limits law.

Katz, a 14-year Assembly veteran who is barred from seeking reelection, was chosen Democratic caucus leader in December, filling a vacancy left when Assemblyman Willie Brown became mayor of San Francisco. Subsequently, in hopes of securing his position as well as encouraging continuity in the Democratic leadership, Katz announced that several veteran lawmakers would be replaced in top legislative assignments by freshmen and sophomores.

“The reality is that the people who are freshmen this year are going to be leadership next year, so this is part of the segue of the senior members who are term-limited out,” said Assemblyman Kevin Murray (D-Los Angeles), a freshman who recently was named assistant minority floor leader.

In addition to the leadership offices, control of the Assembly will be up for grabs in the November elections since all 80 seats will be on the ballot. In the state Senate, most observers expect that Democrats will retain a majority. But because of term limits, experts say there are more candidates and more competitive state elections than at any time in California history.

Both sides also say the election is close enough that the presidential race could tip the Assembly in favor of whichever party carries California in that contest.

With such high stakes, many expect that the 1996 Legislature will be remembered for its hostile rhetoric and political posturing. But Republicans and Democrats are poised for a profound debate about life in California and the function of state government.

It promises to be a clash that even Democrats expect to take place largely on conservative Republican turf.

Welfare System

In addition to tax cuts, lawmakers are preparing for a major overhaul of the welfare system if the federal government approves a proposed block grant system that would give states substantial authority to set eligibility and compensation rules.

On tort reform, the discussion will focus on bills that attempt to limit excessive liability for businesses by restricting the ability of consumers to sue. On the environment, lawmakers will debate a rollback of endangered species protections, a slower schedule for reaching clean air goals and an attempt by farmers to stop a scheduled phaseout of a controversial pesticide called methyl bromide. And Republicans will renew their effort to reform the Education Code and hold teachers more accountable in California schools.

Democrats are seeking more education funding and an increase in the minimum wage.

Many of the issues go to the heart of the philosophical differences that distinguish conservatives from moderates and liberals. As a result, lawmakers predict spirited arguments that will pit more welfare cuts against new tax cuts, school spending against prison construction and Civil Service protections against private contracts.

“At the end of this year, it is quite conceivable that the voters will be able to look at the reforms that the Republican-controlled Assembly has passed and that the Democrat-controlled Senate will have defeated, and I frankly think that there will be a stark contrast between the two houses and the two political philosophies regarding what is the legitimate role of government,” said Assemblyman Jim Brulte (R-Rancho Cucamonga).

This week, lawmakers are expected to consider a bill to put a bond measure on the statewide ballot in March that would pay for new school construction. The plan has been stalled ever since some Republican lawmakers said they would only support the idea if it is coupled with another proposed bond measure to finance new prison construction.

The Democratic leader of the state Senate, Bill Lockyer, promised that in 1996 his party would serve as a reality check on sweeping Republican plans to overhaul government. But he also acknowledged that in several key areas, Democrats may join some significant reforms, including more welfare cuts and a tax cut.

“To the extent that there is any altered course, it’s one that reflects the increasing number of Republicans and especially the far-right religious extremists that have captured the Republican Party,” said Lockyer, who became the Capitol’s leading Democrat with the departure of Willie Brown. “In addition, I think there is a shift in public attitude so there is substantially less optimism about the wisdom of using government to solve social problems.”

Wilson’s Image

By tradition, the governor will officially raise the curtain on the new legislative session in his State of the State speech scheduled for Monday. Two days later, he is scheduled to introduce his proposed state budget, which the Legislature is supposed to adopt by June.

For Wilson, the speech is especially important because it will be the first real indication of how he plans to rehabilitate his own political image after a bungled presidential campaign last year and a sharp drop in his opinion poll ratings.

Aides say the governor will place special emphasis on his continued effort to reform welfare and shrink the size of state government. But this year, with the forecast for a healthy state budget and an improving economy, the rationale will change.

Instead of ordering cutbacks to resolve a budget crisis, Wilson will argue that state government has far exceeded its role as a provider. In the process, he contends, government has become involved in so many aspects of life in California that it is obstructionist.

Wilson has already been an activist governor in seeking some fundamental changes to limit the role of state government. Amid controversy, he has signed a number of bills to reduce the state’s responsibility for welfare and he has transferred substantial duties to county jurisdiction.

Now, the governor is hoping to complete his vision of welfare reform and launch a major new effort to shrink the size of state government by contracting some of its functions to private companies.

Last fall, Wilson sent a letter to all state department chiefs asking that they compile a list of their core functions and identify any areas that might be more cost-effective if handled by private companies. The survey is scheduled to be complete in March, but Wilson asked that a partial report be made in time to include in his State of the State speech.

Times staff writer Max Vanzi contributed to this story.