Deukmejian Cuts Budget, Signs It at $43.9 Billion

SACRAMENTO — Gov. George Deukmejian signed a $43.9-billion state budget today, trimming $472 million from the spending plan sent to him by the Legislature.

“We are in the black,” the governor said at the bill-signing ceremony in his office. “Our fiscal health is good. The economy is booming and California is ready for the future.”

The Democrat-controlled Legislature sent the 1988-89 budget to Deukmejian on June 30, which is 15 days past the constitutional deadline. The Republican governor spent eight of the 12 days the Constitution gives him plowing through the massive document, using his line-item veto power.

The $43.9-billion budget includes a $600-million reserve for emergencies and has no tax increases.

Still $3 Billion Higher

“The Legislature made a serious effort to send me a balanced budget with a prudent reserve,” Deukmejian said. “I vetoed $472 million, or 1.1% of the budget. Even with these vetoes, the budget is still $3 billion higher than last year.”

The bulk of Deukmejian’s cuts, $191.5 million, came in health and welfare programs, where the Legislature had added $125 million in spending. Deukmejian also ordered almost all state departments to make a 1% cut.

The governor said he will urge the Legislature in August to pass a bill to provide full support for the counties’ trial court system, starting Jan. 1. He noted that an item for about $350 million for that purpose was cut out by the Senate-Assembly budget conference committee.

53% for Schools

Deukmejian said he was setting aside $190 million of the vetoed funds for the state to operate the trial courts. He also said he was setting aside an additional $176 million and asking the Legislature to restore some of the cuts it made in programs such as prisons, tourism promotion and state colleges.

Deukmejian, who has been criticized for spending too little for education, said 53% of the budget was earmarked for schools, and that kindergarten through high school will get an 8.2% increase.

He said K-12 allocations in the past six years have risen by 78%, while the number of students has grown by only 13%.

The budget provides $89.8 million in state funds for various AIDS projects, up 28% over last year, he said.

Employees Paid on Time

Although Controller Gray Davis had said he had no authority to pay the state’s new bills, there was no serious disruption in service. State employees were paid last Friday as usual because their checks covered work performed before the end of the fiscal year.

Deukmejian’s signature on the budget culminates a painful cutting process that began in April, when income tax revenue came in $1 billion below expectations.

No one is certain why Californians paid less in taxes this year than projected, but most experts believe it was caused by last October’s stock market plunge or by changes in the state’s tax code to conform with federal tax laws.

Deukmejian responded with a plan to balance the budget by making some cuts and raising more money by freezing tax brackets for one year and revamping bank and corporation taxes.

Controversial Plan Dropped

But he abruptly dropped his plan two weeks later, complaining the press had unfairly characterized it as a tax increase.

His proposal had little support among Republicans in the Legislature.