Assembly Democrats Back Cuts

SACRAMENTO —  With a new leader in place only one day, Assembly Democrats moved Tuesday to cut up to $1 billion from the current year’s state budget, with a vote expected as early as next week.

The action comes as both Democrats and Republicans try to demonstrate frugality at the same time they publicly urge voters to approve $15 billion in borrowing on the March 2 ballot. Top Democratic leaders say that to prevent deep, painful cuts in government services, voters must pass Gov. Arnold Schwarzenegger’s deficit-reduction bond issue, Proposition 57, and Proposition 58, a companion measure that would restrict borrowing to balance future budgets.

New Speaker Fabian Nunez, a Democrat from Central Los Angeles, moved swiftly to bring a new order to the Democrat-dominated Assembly.

He fired several workers on the staff he inherited from former Speaker Herb Wesson (D-Los Angeles), saying they failed to show up for work. He named new chairs to key committees, and he vowed to shrink the size of committees that had grown unwieldy.

“I don’t want to start off my tenure with the baggage of the past,” Nunez said.

After meeting for several hours Tuesday, Assembly Democrats reached tentative agreement to embrace some of the $1.9 billion in cost-cutting measures outlined by Schwarzenegger in November. The reductions the group supports total about $1 billion, according to several legislative sources, but do not include any of the governor’s recommended cuts to transportation, health and social service programs.

Assemblyman Darrell Steinberg (D-Sacramento), new chairman of the lower house’s Budget Committee, is preparing a list of budget reductions to move through his panel and onto the floor by next week.

Although he would not comment on what that list would contain, other Democrats said they planned to limit their action largely to accounting maneuvers and borrowing instead of making significant reductions in government services. The savings would be one-time only and do nothing to help fix the chronic imbalance between what the state spends and what it generates in revenue.

As such, the move would not go far in boosting the confidence of Wall Street, where California currently has the lowest bond rating of any state, hovering just above junk status.

“If the cuts are not ongoing, it doesn’t help move the state toward structural balance,” said Steven Zimmerman, managing director at Standard and Poor’s.

Most of the savings would be generated by a $475-million loan the state would take from local governments, and pay back in 2006. The list might also include taking $105 million in unused state flood control money from this year and using it to reduce the deficit, projected at $14 billion, in fiscal year 2004-05.

“It is certainly forward progress, and we are glad to hear this is happening,” state Department of Finance spokesman H.D. Palmer said of the Democrats’ discussions. “That said, we have a long way to go.”

Palmer said the Legislature could have captured $65 million in savings had members acted in January on the governor’s midyear budget cut package. Schwarzenegger proposed the reductions in November.

In this year’s budget, the governor wants to roll back funding for transportation projects by more than $800 million, cut Medi-Cal and other health programs for the poor by $210 million, and reduce welfare spending by $137 million. Democrats say such cuts would result in major policy shifts and should only be considered after exhaustive debate and as part of an overall 2004-05 budget package in the spring.

Democrats have by and large embraced another aspect of Schwarzenegger’s budget plan -- Propositions 57 and 58.

The California Democratic Party and legislative leaders endorsed the measures Tuesday on the north steps of the Capitol. The endorsements were firm, but hardly unqualified.

State party Chairman Art Torres called Proposition 57 “not the best alternative before us” but said it was a necessary compromise. Senate President Pro Tem John Burton (D-San Francisco) said the government urgently needed the money from the $15-billion bond measure.

“Unless you find a very big bank to rob, there’s no other way to get this kind of money,” Burton said. Without the two measures, which are linked, there would be cuts, and he added: “That would be a catastrophe.”

U.S. Sen. Barbara Boxer also joined her Democratic colleague Sen. Dianne Feinstein in supporting the measure, saying, “I’ve been convinced by Republican and Democratic officials who deal with this crisis every day that this is one solution that they agree on to address the state’s fiscal problems.”

The governor is scheduled to campaign for the measures in the Central Valley today.

Republicans had been frustrated with the Democratic-dominated Legislature’s failure to swiftly pare back spending.

Nunez fired at least three employees of the speaker’s Office of Member Services, a political branch of the Legislature that promotes the election of Democrats in the Assembly.

“We want people who can actually do their jobs and perform their jobs and their tasks as they are assigned in a manner consistent with job descriptions,” said Nunez chief of staff Danny Eaton. “It is our understanding that these individuals did not meet those requirements.”

One of those fired, Gary Webb, said he had been working lately researching the federal Patriot Act and vocational education reform. The speaker may hire to fill the empty positions or there may be more terminations as he reviews Assembly operations, Eaton said.

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Times staff writer Joe Mathews contributed to this report.