A Momentary Victory

CALIFORNIA Gov. Pete Wilson stood his ground, and the Democrats in the Assembly finally yielded on the key issue of slicing the state's huge education costs.

Like everything in California's budget conflict, resolution of the school-funding standoff wasn't simple. It involved a bewildering process of "recapturing" excess state support for schools last year and borrowing nearly $1 billion against future years - a tactic that, according to education officials, amounts to a net reduction in funding.

Many headlines depicted the budget outcome as a victory for a gritty governor. More likely, the months of wrangling, during which the state had to resort to IOU1s to pay its bills, have damaged every politician involved. The Legislature's approval rating sank to 9 percent, while Mr. Wilson's drooped to 20 percent.

Unlike most members of the Assembly and Senate, however, Wilson doesn't face the voters until 1994. The imminent legislative races were doubtless a factor in Democratic lawmakers' ultimate surrender. The governor hopes that this year's budget agreement, which avoided further large tax increases, will help create a more favorable fiscal and political climate next year. But most of all, he's counting on an improving economy to restore California's dwindling revenues.

But a shift in the economic winds is hardly certain. National economic recovery remains slow. Federal defense cuts will continue to shrink payrolls at some of the state's biggest companies. And state government itself, with a burdensome workers-compensation system and a complicated web of regulations, is seen by many as a major obstacle to economic revival.

Another Wilson hope rests on California's tradition of direct democracy - lawmaking through the ballot. The governor wants passage this fall of a proposition that would further reduce welfare payments and greatly enhance his powers to cut through budgetary impasses. Ballot initiatives such as Proposition 13, which capped property taxes, and Proposition 98, which mandates 40 percent of the state budget for education, helped set the stage for the current crisis. Can they now point the way out?