Efforts to Approve Budget Fail; State Can’t Pay Bills

SACRAMENTO —  Assembly Republicans rejected 11th-hour efforts by Democrats on Tuesday to pass a proposed $41.1-billion budget, assuring that the state will begin the new fiscal year today without the legal authority to pay its bills.

The seriousness of the Legislature’s failure to act on a new spending plan will grow with each day that passage of the budget is delayed, but workers who provide in-home nursing services to the disabled, among others, will begin feeling the pinch today.

‘Cease Writing Checks’

Controller Gray Davis said his office could not issue 2,500 checks due to be mailed out today to people who provide those services.

“I have instructed everyone in our disbursement office to cease writing checks for services rendered after July 1,” Davis said in an interview Tuesday.

The controller also said he will not have the legal authority to pay the federal government the state’s $152-million share of supplemental Social Security payments for aged, blind and disabled people that is due today.

That means that the 716,000 Californians receiving extra living allowances under the federal program could receive reduced checks in July, although the federal government could, as it has in the past, advance the state’s share and send out full checks pending enactment of the budget.

The controller said that although the state will not have the legal authority to pay its bills, the situation is expected to be temporary and the checks will be mailed as soon as the governor signs the budget.

Davis advised vendors selling goods and services to the state to continue to do so. “The state has always honored its commitments, and I fully intend to continue that policy,” Davis said.

Both Republican and Democratic leaders said the budget impasse could end today.

GOP lawmakers, who had used the fiscal year deadline as leverage in an unsuccessful effort to force Democrats to vote for Gov. George Deukmejian’s $700-million income tax rebate plan, said their opposition to the budget will end as soon as the deadline passes.

In the Assembly on Tuesday, the vote on the budget was 44 in favor and 33 against, but 54 votes--two thirds of the Assembly membership--were needed for passage. Only one GOP lawmaker cast a vote for the budget.

Before the vote, Assembly Speaker Willie Brown (D-San Francisco) accused the governor and GOP lawmakers of resorting to “blackmail” to force Democrats to approve the rebate.

During a floor speech, Brown said the GOP action was “obviously an effort to play a game that I do not understand. I don’t understand the rules of the game. I don’t understand the result.”

Because no action was taken on the rebate plan Tuesday, the last day of the 1986-87 fiscal year, it means that the potential surplus available for a rebate will balloon to $1.1 billion, rather than the $700 million originally proposed by Deukmejian.

That is because the governor had proposed, along with the rebate plan, using $400 million of this year’s expected $1.1-billion budget surplus to increase state spending on schools and other programs. By not acting Tuesday, the Legislature lost the chance for additional spending authority; under a state spending limit law passed by voters in 1979, the entire surplus is now subject to rebate.

Brown, during a news conference, said Democrats will continue to battle Republicans on details of the rebate, adding that the fight could take up to two years.

Democrats, who until the last few days had been insisting that the entire $700 million proposed for a rebate be spent instead on public schools, hoped to come up with a compromise that would offer a rebate as well as something extra for schools.

Assembly Republican Leader Pat Nolan of Glendale called support for a rebate a “deathbed conversion” that rings “very, very hollow.”

In the Senate, Democrats remained strongly opposed to the governor’s rebate plan.

Senate President Pro Tem David A. Roberti (D-Los Angeles) called one compromise that offered up $400 million in additional school spending “a Band-Aid.”

“The $400 million is so small as to really amount to nothing for schools,” Roberti told reporters. “The schools are in trouble. By throwing out a Band-Aid here and a Band-Aid there, you are only giving a false sense of security.”

Before the Assembly vote, a small group of Democrats offered to break ranks and vote for the rebate plan with GOP lawmakers. Their efforts failed.

GOP lawmakers called the compromise efforts “too late” and refused to bring the rebate measure up for another vote unless Senate Democrats also agreed to go along.

Along with the main spending bill, lawmakers rejected, on a 45-33 vote, a companion bill making statutory changes necessary to balance the budget.

Refusal to pass the second bill means that last year’s budget will be $400 million out of balance, necessitating additional spending cuts.

Because the surplus developed in the last budget year, lawmakers had until midnight to act in order to appropriate the money.

Assemblyman John Vasconcellos (D-San Jose), chairman of the Ways and Means Committee, predicted that Deukmejian would use his veto authority to trim at least $700 million from the proposed spending plan.

Vasconcellos said the money would probably come from spending increases proposed for public schools, community colleges, county health services and salary increases for state workers, including state college and university instructors.