WILSON ANNOUNCES WINDFALL OF BILLIONS.

Byline: Paul Hefner Daily News Sacramento Bureau

Outpacing even the most rosy estimates, Gov. Pete Wilson said Thursday that California's growing economy will bring in $4.4 billion more in taxes than he predicted five months ago.

With state revenues fueled by job growth and a bull run-up in the stock market, Wilson said that even after covering his spending proposals and cutting the car tax, his revised budget would leave the state with a $1.6 billion reserve.

California is on a pace to create 500,000 new jobs this year alone, and the rate of job growth in the state exceeds the national average in every category but one - growth in government jobs, officials said.

``This economy is a rocket in flight,'' Wilson said.

The size of the surplus - more than double the $2 billion estimate others made earlier - is likely to put added pressure on lawmakers to include a tax cut in this year's budget.

On Wednesday, Wilson proposed slashing the state's vehicle license fee by 75 percent over five years. Assemblyman Tom McClintock, R-Granada Hills, along with several other conservatives, have pushed for abolishing the tax.

But Democrats, who hold majorities in both houses of the Legislature, have rebuffed early calls for a tax cut, arguing the state should spend the surplus improving schools and shoring up funding to local governments.

``It gives us an opportunity to invest in California, to invest in the future,'' said Assembly Speaker Antonio Villaraigosa, D-Los Angeles. Villaraigosa said his top priority would be committing $1 billion of the surplus revenues to schools.

Villaraigosa also said that consideration of a tax cut should wait until economists can more clearly project how much of the surplus comes from a one-time spike in revenues caused by the rising stock market and easing of capital gains tax rates.

Wilson's budget officials estimated that most of the money - about $2.5 billion - represents continuing revenue. But Villaraigosa said it would take several weeks to be certain of those numbers.

The sharp differences between Republicans and Democrats fueled speculation that lawmakers might spend a long summer arguing over the budget, and again miss the July 1 deadline for enacting a state spending plan.

Rather than approving a tax cut, Sen. President Pro Tem John Burton, D-San Francisco, said earlier the state should restore the $65 renter's tax credit.

The credit has been on the books for years, but routinely suspended amid the annual haggling over the state budget.

But Wilson had little appetite for the idea. In terms that left members of his own staff red-faced, he suggested the credit would be too little to outweigh public support for the car-tax cut.

``If someone offered you a weenie or a ham, which would you take?'' he said.

There were few surprises in Wilson's revised budget itself. The governor and members of his staff outlined most of his spending proposals earlier at news conferences and orchestrated news leaks designed to maximize media interest.

But Wilson did call for increasing funding for foster care, nursing homes and research on curbing drug and alcohol addiction.

He also highlighted his plans to increase spending on public schools by $581 million - $500 million more than required under the state's education funding formula.

Wilson acknowledged that there would be calls to allocate even more money on education.

``There will be pressure to spend more on education, there always is,'' he said. ``But to those who say `show me the money,' I say, show me the results.''

Proposed spending

What's new in Gov. Pete Wilson's revised budget proposal submitted Thursday:

EDUCATION

Additional spending of $760 million - $500 million from the surplus and the rest from reduced state retirement-fund contributions due to a booming stock market.

COLLEGES

New spending of $280 million for the University of California, the California State University and community colleges.

TAXES

A reduction of $995 million, by cutting the Vehicle License Fee, a car property tax, from 2 percent of value to 1 percent (and later to 0.5 percent). Local governments would get state funds to make up lost revenues.

WELFARE

New spending of $60 million to provide a 2.84 percent cost-of-living increase for 1 million aged, blind and disabled recipients of Supplementary Security Income-State Supplementary Payment.

GAMBLING

Would spend $565,000 for the new Gambling Control Commission, set to begin regulating card rooms next January, to begin operations on July 1.

RESOURCES

Additional spending of $406 million from special and general funds.

STATE WORKERS

Would spend $60 million to provide an additional 1 percent, for a total of 4 percent, for state employee pay raises being bargained with unions. However, negotiations are stalled.

RESERVE

Would set aside $1.35 billion for reserve, bringing it to $1.6 billion.

- Associated Press 

CAPTION(S):

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Box: Proposed spending (see text)