Fun and Games With the Surplus

Republican Gov. Pete Wilson and Democratic leaders in the Legislature are playing election-year Monopoly with the state’s $4.4-billion budget surplus, a dangerous game that could plunge California back into red ink in just a couple of years. And six days into the new fiscal year, the two sides are some $2.5 billion apart in seeking a compromise version of the budget for the year ending next June 30.

Each side is attempting to fashion the most attractive package it can offer to voters in November--a $3.6-billion cut in the car tax proposed by Wilson and fellow Republicans and massive new spending on public education and a gimmicky $1-billion tax cut by the Democrats.

Sacramento is trying to build a budget from the top down. It should go back to basics and start with these fundamentals:

* Set aside a reserve fund of perhaps $1.5 billion against fiscal emergencies such as a natural disaster or a sudden cooling of California’s economy. If this money were not spent, it would roll over into the next year’s budget.

* Spend the nonrecurring windfall on one-time-only projects. Some examples: construction and repair of state buildings, including those on college and university campuses; deferred maintenance in state parks, natural resource protection and, for local flood control projects, the $172 million the state already owes.

* Find a middle ground on new spending on public schools. Wilson has kicked in $500 million more in basic aid to education, but nearly all the money is earmarked, such as $250 million for math texts. Democrats want to allocate as much as $1.2 billion over the voter-mandated minimum spending levels, giving more discretion to school districts in how the money is spent. As long as Sacramento preaches local control of schools, districts should have some flexibility in using the new money. Wilson and lawmakers should listen to Legislative Analyst Elizabeth G. Hill: Give districts more leeway but link money to incentives for better school administration and achieving state goals.

* Provide a reasonable pay raise for state employees, who have had none for more than three years, and do it without meeting Wilson’s demands for changes in Civil Service rules. Civil Service reform should be debated in the Legislature, not used as a bargaining chip in contract negotiations.

* Then, after those and other priorities are set, the governor and Legislature should work out a tax cut that the state can afford even if the economy slows. The $1-billion range seems reasonable. The Democrats have offered a plan that is impractical, but there is merit to their proposal that it be for one year only and renewable if the money is available.

In Monopoly, the loser usually is the player who fails to think ahead and conserve resources and then lands on Park Place when there’s a hotel on it. California cannot afford to play the budget game that way.