California wrestles with budget as Prop. 13 pulls plug on state surplus

Call it "The Reckoning -- Part II." It stars the California Legislature, with a supporting cast of cajoling lobbyists and fist-shaking local officials. And it is directed by California voters.

The plot, which unravels daily, revolves around a band of politicians who are talking about heeding a long-ignored message sounded by voters via Proposition 13: streamline government bureaucracy and trim spending.

For the next five months, state legislators will be in the thick of budget battle spurred by the exhaustion in June of a state surplus that once totaled nearly $4 billion. The surplus was used to avert the current crisis for nearly two years by helping ease local governments through the revenue crunch caused by the property-tax-slashing Prop. 13.

For the first time in nearly 20 years, California legislators are faced with the end of the "bail out" surplus fund as well as a lagging state economy. This will force them to use a word seldom heard during the state's past two decades of booming economic growth: "no."

But even as state officials begin the politically delicate task of refusing or cutting requests for money, interviews with several state legislative leaders indicate the emergence of a new reckoning with Prop. 13 -- a government-cutting attitude shared by Republicans and Democrats alike.

Most politicals analysts agree that a desire to limit government growth was the underlying message of Prop. 13. But it was not until this year, prompted by the state's fiscal dilemma and the popularity of President Reagan's "get government of our backs" campaign theme that elected officials here have begun to consider taming bureaucracy and returning government control to local levels.

"We will carry out the mandate of Proposition 13," says state Senate minority leader William Campbell. "The people never got what they really wanted with Prop. 13 -- less government -- and now we'll deliver that.

"We [legistlators] should ask ourselves, 'What are the mainstream services people need? What should government provide?'" says the ranking Republican, who has tried unsuccessfully in recent years to pass a sunset law that would require state agencies to periodically justify their existence or face extinction.

"There are no teethmarks on the bullet here in Sacramento. And we're going to put some on it," he says.

Already, lobbyists for schools, cities, counties, state employees, and welfare recipients are making their pleas for more money in a budget that, with an allowance for only a 1.7 percent increase in spending, has been described as the tightest state spending program since World War II.

Under the $24.5 billion preliminary budget released recently by California Gov. Edmund G. Brown Jr., cuts include slicing more than $400 million in aid to local governments.

The battle, as Republican Sen. Ken Maddy says, "will be a knockdown as to who wins . . . and no one will win it 100 percent." Although few specifics recommendations so far have been proposed by members of the Senate and Assembly, it is clear from the budgetary targets already attacked that bureaucracy-clipping is in for substantial scrunity -- and publicity -- before the new budget is adopted in June.

One early target has been the automatic cost-of-living adjustments now accorded by state law to groups such as state employees and welfare recipients. Under the budget proposed by Governor Brown, such automatic increases are suspended for the fiscal year 1981-82. But if some legislators get their way, such increases will be replaced with a case-by- case review by the legislature each year.

Further, calls for no new spending programs -- a cry voiced early on by Assembly minority leader Carol Hallett -- indicate that Brown's modest proposals for $109 million in new programs may also fall prey to budget-cutting legislators.

In addition, county officials already have begun mobilizing efforts to pare away many state-mandated programs, such as health and welfare services, which account for some 80 per cent of county spending. They also propose to scrap excessive government regulations and paper work, a move one county supervisor estimates could save $120 million annually.

"We need to foster revolutionary approaches in delivering government services ," says Sunne McPeak, a Contra Costa County supervisor. "We are literally declaring war on paper work.

"We want to see how we can save money without reducing services, to bring the efficienty in government which votes demanded when they passed Prop. 13," she says.