BUDGET IMPASSE MAY STOP PAYMENTS.

Byline: Rick Orlov Daily News Staff Writer

As Gov. Pete Wilson and legislative leaders prepare for their first meeting today to try to resolve the state's budget impasse, state Controller Kathleen Connell said Friday that she might be prevented from making $875 million in payments for programs, including child welfare.

Wilson and the legislators, known as the Big 5, are scheduled to discuss ways to end the impasse on the $75.8 billion budget that has revolved over how to spend a $4.4 billion surplus and provide a tax cut.

A court ruling this week told Connell she could pay state workers - with the exception of elected officials and their staffs - before the budget is resolved. But Los Angeles Superior Court Judge Robert H. O'Brien issued a temporary restraining order blocking some payments until a budget is adopted.

A hearing is scheduled July 21 to clarify parts of the ruling.

``We are seeking clarification as to the reach of this decision,'' Connell said in a statement. ``The importance of this preliminary ruling, should it stand, is that it could be binding for many years to come.

``As currently written, in the future, my office would be forced to halt payments to Medi-Cal providers and CalWorks payments in the absence of a budget.''

Unless there is a resolution, Connell said the court order restricts $20 million in state Department of Social Services payments to counties for CalWorks administration, child welfare services, foster care, food stamps administration, other administrative expenses and various automation projects.

Also, the court order will restrict state payments of $136 million due later this month to counties for those programs, as well as DSS payments of $718 million to counties for Cash Assistance to Families and Children.