ASSEMBLY APPROVES BUDGET : SPENDING PACKAGE REFLECTS OPTIMISM.

Byline: Mark Katches Daily News Sacramento Bureau

The California Assembly voted overwhelmingly late Monday night to deliver to Gov. Pete Wilson a $63 billion spending package - considered by lawmakers to be the rosiest state budget of the 1990s.

With little dissent, the Assembly approved the budget on a bipartisan 61-17 vote.

In stark contrast to the grim recessionary years marked by painful service cuts, the 1996-97 fiscal year will begin with about $3 billion in new school spending, a 5 percent tax cut for businesses, and no fee hikes for community colleges and state universities.

``We have started on the road to recovery,'' said Assemblywoman Denise Moreno Ducheny, D-National City, who served on the joint-house budget conference committee.

The spending plan also includes $150 million in new programs for local law enforcement and $287 million set aside in a reserve fund for emergencies - up from $14 million in reserves a year ago.

Cost-of-living increases for aged, blind and disabled welfare recipients were also funded.

``This budget reflects a lot of the principles that Democrats said in January were important to us in crafting a budget,'' said Assembly Minority Leader Richard Katz, D-Panorama City. ``Back in January, we said we wanted the maximum amount of money for education. This budget does that.''

But state residents will not see any direct tax relief this year. Wilson's call for a 15 percent across-the-board personal income tax cut did not survive the budget process. Legislators also suspended the renters tax credit for another year.

``I think this budget is a compromise budget,'' said Assemblyman Antonio Villaraigosa, D-Los Angeles. ``That's what it is, pure and simple.''

Unlike the Democratic-controlled Senate, which swiftly passed the same spending plan Sunday evening, the Republican-dominated Assembly moved at a slow pace for most of the day.

But when it was time to pass the budget, it was done without any objection from conservative Republicans over the issue of state-funded abortions for poor women.

With the budget bill out of the way, the Assembly turned its attention to finishing up more than two dozen smaller trailer bills that are necessary to enact the budget.

Both the lower house and the Senate concluded their work, sending the budget package to the governor.

Wilson is expected to sign the final document soon after the two-inch-thick bill and trailer legislation crosses his desk, as early as today.

The budget was crafted by the six-member conference committee with input from Wilson and legislative leaders, including Katz.

Since Wilson unveiled his initial budget blueprint in January, the state collected $2.7 billion in unanticipated revenue.

Flush with cash, state lawmakers were able to move away from the cutting mode of past budgets and focus on new school spending initiatives, including $771 million earmarked to reduce class size in kindergarten through third grade and $50,000 grants for every school in the state.

``What we do with this budget, I believe, is create the opportunity for every schoolchild to be the best that they can be,'' Katz said. ``And that's what we ought to be about.''

The budget holds the line on community college and state university fees and funds court-ordered desegregation programs for school districts including Los Angeles Unified.

Although there is no tax relief for individuals, the budget includes the 5 percent bank and corporate tax reduction, which lowers the rate from 9.3 percent to 8.84 percent.

``The fact is today we need to make California competitive,'' said Speaker Curt Pringle, R-Garden Grove. ``This budget reflects a tax cut. That tax cut is significant for our competitiveness. This tax cut is important for the future of California.''

Pringle said he hoped to see an individual income tax cut next year.

From the pace of things Sunday night and Monday, it appeared the Assembly might take days to pass the budget. The lower house spent more than three hours stuck on one trailer bill Sunday - one that would allow the renters tax credit to be suspended for another year.

Most Democrats have called for the restoration of the tax credit, but even Republican Assembly members were reluctant to deprive renters of the tax break this year.

A close look at the initial vote tally on the trailer bill showed that just about every member of the Assembly involved in a tight election fight in November voted against suspending the credit, regardless of their party affiliation.

Lawmakers who wanted to restore the credit included Paula Boland, R-Granada Hills, Bill Hoge, R-Pasadena, and James Rogan, R-Glendale.

By early Monday morning, however, all three caved in to pressure from other Republicans and voted to suspend the credit, which would have cost the state government more than $500 million.

Just two months ago, none of the three Valley lawmakers hesitated to vote against the renters credit when Democrats tried to include it in the Assembly version of the budget.

``We're two months closer to November,'' quipped Katz.

Rogan is running for Congress. Boland is running for state Senate and Hoge is seeking re-election to the Assembly.

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PHOTO Democrat Richard Katz, left, and GOP Speaker Curt Pri ngle confer at the Assembly podium Monday prior to the vote on the budget bill.

Associated Press