finances

SACRAMENTO — The final pieces of a multi-bill legislative package needed to implement a $52.1-billion state budget stalled in the state Senate on Monday as lawmakers made last-minute efforts to change or derail several measures.

The major issues still on the table include a proposed suspension of the renters tax credit and legislation to allow local governments to implement cheaper retirement plans for their workers.

The Senate shut down late Monday afternoon without taking major action. Senate President Pro Tem David A. Roberti (D-Van Nuys) said members would return at noon today, and “we will go until all business is completed, exhausted or until all hope is dead.”

In one late maneuver that was outside the framework of the bipartisan budget agreement, a proposal was emerging to give local governments the proceeds of a new statewide tax on tobacco while stripping them of much of their authority to regulate smoking.

Gov. Pete Wilson was awaiting passage of the package to which he had agreed last week with Democratic and Republican leaders of the Assembly and Senate. The new fiscal year begins Thursday.

“The governor will sign the budget as soon as he has the entire package on his desk,” said Dan Schnur, Wilson’s chief spokesman. “Every piece of the budget package is critical. You take out one piece and the package doesn’t fit together anymore.”

There was disagreement, however, over just what constituted the agreed-upon package.

Wilson Administration officials have said all five members of the leadership group agreed to suspend the renters tax credit for two years. The Assembly passed a bill to do that last week.

But the legislation has hit a snag in the Senate, where Roberti insists that the deal included an agreement to place a measure on the ballot next year that, if approved by the voters, would embed the renters credit in the state Constitution. Such a move would make it impossible for the Legislature to tamper with it again.

Roberti and Wilson appeared to be on the verge of a compromise late Monday, although it was not clear if there was sufficient support in the Legislature. The new deal would put the issue to the voters, as Roberti wants, but would reinstate the $60 credit only for tenants who have a state tax obligation. The credit now goes–in the form of a refund–even to renters who pay no taxes.

Senate Democrats also appeared to be dragging their feet on the local government retirement issue. That bill, passed by the Assembly, would allow local governments to implement pension options for new employees that would save the governments money over time.

In holding up the bill, which is opposed by organized labor, Democrats appeared to be gambling that Wilson would look the other way because the measure produces no immediate savings to any level of government. But Schnur said the governor would not give up any piece of the package, no matter how minor.

“Even if the specific legislation doesn’t have direct fiscal impact, it is still the part of an overall agreement,” Schnur said. “We want to get this signed before midnight Wednesday. But we need the whole package in place before he can sign it.”

Schnur said the retirement bill, and another measure pending to allow counties to reduce general assistance welfare payments by as much as 27%, helped provide the rationale for the governor’s proposed shift of $2.6 billion in property tax revenue from local government to schools.

The so-called mandate relief, he said, was intended to give counties more control of their shrinking budgets.

The tobacco tax proposal floated Monday, although not part of the package, would address the same issue.

Local government reportedly could realize about $300 million annually through the 15-cent per pack tax. But in return, they would have to agree to strict limits on their ability to control smoking, perhaps leading to a state-imposed repeal of anti-smoking ordinances in place.

Several sources said Monday that the proposal had the tacit support of the tobacco industry and of Los Angeles County, which would stand to gain several millions dollars.

Sen. Charles M. Calderon (D-Whittier) confirmed that he was pushing the tobacco tax legislation. He said it made sense to restrict local government’s regulatory powers at the same time–a goal long sought by the tobacco industry.

“If we’re going to dedicate a revenue source, we have to make sure that the locals cannot circumvent or cut down the revenue source by continuing to impact the sales of cigarettes,” Calderon said.

But anti-smoking activists were out to kill the plan before it could even become an official proposal.

“Everybody wants to do something for (Los Angeles) County, but not under these conditions,” said Sen. Diane Watson (D-Los Angeles). “This is the most dishonest, diabolical scheme. It’s the worst kind of politics.”

Times staff writer Dan Morain contributed to this report.

State Budget Watch

Less than three days before the end of the fiscal year, these were the key developments in Sacramento:

THE PROBLEM: The state will end the year with a $2.7-billion deficit and faces a $9-billion gap between anticipated tax revenues and the amount needed to pay off the deficit and provide all state services at the current levels for another 12 months.

THE LEGISLATURE: Final legislative approval of the last handful of bills to complete the 1993-94 state budget was making no progress by late afternoon. The Senate met in the morning but recessed without voting on four budget bills, the stickiest of which would suspend the renters tax credit for two years.

GOV. PETE WILSON: Wilson was holding fast to his vow not to sign a new budget until all companion measures are passed by the Legislature.

KEY DEVELOPMENTS: Senate President Pro Tem David A. Roberti (D-Van Nuys) was one of those holding up his approval of legislation reducing the renters tax credit. He was seeking as a condition assurances in the form of a proposed constitutional amendment, to be considered by voters, that the credit would be protected and fully funded in future years.