California Braces For Service Cuts Under Fiscal Plan

AFTER the conclusion of California's greatest budget impasse - a two-month fight to trim $10.7 billion in spending - the state is now bracing for Phase 2: coping with the cuts themselves.

The embattled leaders who wielded the scissors - governor and legislators, Democrats and Republicans alike - are bracing for the political fallout both from their decisions and from their procrastination in getting out a budget.

"Those who are up for reelection this fall are going to have a lot of explaining to do," said Mervin Field, director of the California Poll. "The entire state political establishment has mud on its face."

The real pain starts now, Mr. Field added. "With the adverse effects this is going to have on cities and towns, universities, agencies, and the rest, the discomfort of the last 64 days is going to seem minor."

Sixty-four days after the state ran out of money and began paying its bills with IOUs, legislative leaders finally succumbed to Gov. Pete Wilson's demand for a balanced budget with no new taxes. He signed the $57.6-billion "austerity" budget at 1:45 a.m. on Sept. 2.

"The sad thing about this whole episode is that this could have happened 2-1/2 months ago," Governor Wilson said.

The end of the budget crisis leaves the state to pay $3.4 billion in IOUs (known as "registered warrants"). Another legacy of the impasse is that California's top bond rating has been downgraded at least twice.

"Never again should Sacramento put the people of California through this kind of hell," Wilson said.

"It's not clean, but it does something to solve the state's problems," countered Wilson's nemesis in the Legislature, Assembly Speaker Willie Brown (D) of San Francisco.

Education funding was the final hurdle legislators had to overcome to produce a budget. Through what many are calling fuzzy accounting, spending per student will remain the same as in 1991, but the state will recapture $1.1 billion that it overpaid to schools last year.

Now the cost-cutting has been passed on to virtually every government agency. The new budget calls for about $1 billion in cuts from public schools, $1.7 billion from health and welfare programs, and $1.3 billion from aid to local governments.

"Pick a program," said Dennis Morefield, a spokesman for the Los Angeles County Board of Supervisors, which will be looking at cuts of between $400 million and $650 million in its annual $2.2 billion budget. To bridge the gap, the county may shut 16 health centers, lay off 500 to 700 sheriff's department personnel, and close several libraries.

Although there are no new taxes, the budget imposes more than $500 million worth of increased fees and indirect levies. It reduces existing welfare payments to poor families by 5.8 percent, and applies the same cuts to programs benefiting the elderly, blind, and disabled.

The budget cuts affect not only public schools but also all three state university systems - community colleges, 12 California state universities, and nine University of California campuses. The UC system alone must trim $224 million this year by reducing already limited enrollment, shrinking or cutting programs, or raising fees.

At the political level, pundits in all corners of the state say it is premature to assess winners and losers, at least in the short term.

"This has been one of the saddest and most pathetic episodes in California history," says Sherry Bebitch Jeffe, a political scientist at the Claremont Graduate School. "Looking for winners and losers has been an irresponsible part of the game that has contributed to California's problems."

Growing voter anger has been leveled at Wilson for holding his hard line against the Democratic-controlled Legislature, which submitted several dozen plans that would have limited cuts to education, health, and welfare spending.

Wilson, who has relative immunity from the voters' anti-incumbent mood because he does not face reelection until 1994, took a calculated risk in pressing for fiscal austerity. Some analysts feel the governor won this round, but the final outcome may not be clear for months.

"It seems that Wilson won," said Alan Heslop, a professor of government at Claremont McKenna College. "He forced the Legislature to adopt his approach to no-deficit spending."

Dr. Heslop said that Wilson will be able to claim responsibility if, and when, the California economy turns around. In addition, the governor will probably have a stronger hand in next year's budget process, for at least two reasons.

First, Democratic losses in the November election should outnumber Republican ones, simply because there are more Democratic incumbents in the Legislature. Second, the budget mess may boost support for a Wilson-sponsored ballot initiative to reform the state's welfare system.

Seen in a larger, historical context, the budget fiasco, observers say, was the result of several factors that led lawmakers to be more intransigent than usual. Chief among these are redistricting - which has upped the political ante for legislators - and term limits imposed two years ago, which may have led some legislators to see this as their last opportunity to settle ideological scores.