Wednesday, December 17, 2003



* NEW BUDGET ESTIMATE; NEW FINANCE DIRECTOR: After a conference call with legislative leaders, Governor Davis announced that the budget shortfall may be $34.8 billion dollars, which is equal to approximately 45% of the state’s current year general fund. This is a substantially larger than earlier estimates.

Governor Davis also announced that Steve Peace, former San Diego-area state Senator and also former chair of the Budget Conference Commitee, would replace Tim Gage as Director of Finance. BELOW is the press release.

* HEALTH CARE HEARINGS: Yesterday, December 17th, over 500 people came to testify at the Los Angeles hearing of the Assembly Budget Subcommittee on Health and Human Services about the impact of the budget cuts. Lines stretched out the door simply to get in, and many didn’t get in until hours later. Over 100 people signed up to give public comment after three panels of about 20 organizational representatives and individual patients detailed the cuts and their consequences on adults, seniors, people with disabilities, children, families, and health care providers.

The committee, chaired by Assemblywomen Judy Chu (D-Monterey Park) included Assemblyman Mervyn Dymally (D-Compton); Assemblyman Ray Haynes (R-Temecula); and Assemblyman Robert Pacheco(R-Walnut). Assembly Dario Frommer (D-Los Angeles), also on the committee, did not attend. Other legislators present but who aren’t on the committee included Assemblywoman Jackie Goldberg (D-Los Angeles), Assemblyman Paul Koretz (D-West Hollywood), Assemblywoman Sally Lieber (D-Santa Clara) and Sen. Gil Cedillo (D-Los Angeles), who formerly chaired this Assembly Budget Subcommittee last session.

The first half-hour featured statements from legislators, some of them sharply worded. Chu blamed part of the deficit on “the conservative blockade against tax increases” and termed the cuts “heinous.” Haynes argued that tax rate increases don’t necessarily bring about revenue increases. Yet both Republican members, Haynes and Pacheco, stated that they were keeping an “open mind” and were willing to “listen.” Goldberg later followed up, saying “being open-minded is good; acting, as if you care, is better.” Nunez said “these cuts are draconian” and reassured the audience that “there are folks who will fight to the very end to not balance the budget on the backs of the poor.” While endorsing revenue solutions like an alcohol tax, Koretz stated the case most baldly, saying “the cuts in this area are the cuts that make me the most concerned… The most important thing is to not kill people… If we do not have a balanced solution, we will ruin people’s health and we will kill people.” Cedillo stated the principle that “in the fifth largest economy in the world,” that “those who are the least able should not be asked to carry the largest burden.” BELOW is the AP article on the hearings.

* ATTACHED is an updated SCORECARD of the proposed budget cuts in health care.




Governor to Deliver Comprehensive Plan to Address the Gap in January

SACRAMENTO– Governor Gray Davis today announced that California faces a budget shortfall of $34.8 billion.

“This budget shortfall is larger than any expert predicted,” the Governor said. “A shortfall of this size represents 45 percent of the current year General Fund.”

Governor Davis made the announcement three weeks earlier than the annual release of the January of the 2003-04 Budget.

“I am releasing information on the size of the shortfall now so that the Legislature and the public can grasp the importance of swift action,” Governor Davis continued. “This is a national problem. 46 states and the federal government are also facing serious budget shortfalls. To address this challenge in California, it is clear that everyone must be part of the solution.”

California’s economic challenge is largely a result of a dramatic decline in revenues. 51 percent of the problem ($17.7 billion) is due to underperformance of the economy. 13 percent ($4.5 billion) results from required increases in spending to address caseload growth and the loss of anticipated federal funds. The last portion of the shortfall, ($12.6 billion), results from one-time solutions used to close the current budget that are no longer available.

Today’s announcement is one more step by the Governor to take immediate action to deal with the shortfall. Earlier this month Governor Davis submitted a $10.2 billion budget reduction package to the legislature. The Governor also called the Legislature into Special Session to work on the budget reduction package. He has issued an Executive Order to state departments to freeze spending, identify General Fund savings and reduce expenditures. Davis also enacted a state hiring freeze, banned all non-essential travel and has eliminated more that 12,600 state positions.

Governor Davis today also announced that former State Senator Steve Peace would join the Davis Administration as Director of the Department of Finance. Peace will succeed Tim Gage, who was appointed as Director of Finance on December 16, 1998. Gage will continue to serve in the Davis Administration through the introduction of the 2002-2003 Budget and the transition.

“Tim’s departure is a big loss to this administration,” Governor Davis said. “He was one of the first people to join my team and has played a major role in every significant accomplishment of the last four years.

“Tim has delivered four budgets for me, including the first back to back on-time budgets in 16 years. He is a great public servant, and there are few people who have a greater sense of integrity and honor.”

Tim Gage expressed his appreciation for the opportunity to serve in the Davis Administration. “It’s been a tremendous honor to serve this Governor and the people of California.” Gage said. “Four years is a long time to serve as Finance Director and I look forward to other opportunities that will allow me to spend more time with my family.”

“In Steve Peace I have found a worthy successor,” the Governor continued. “Because of his in-depth knowledge of the budget process and strong ties to legislative leaders we won’t lose any momentum as we begin this difficult year. His experience as Chair of the Budget committee and his skill in tackling difficult issues will be critical assets as we face this extraordinary challenge.”

Senator Peace, 49, of El Cajon, served for nine years in the California State Senate, where he represented the 40th Senate District within San Diego County since 1993. Senator Peace chaired the Senate Budget and Fiscal Review Committee and the Senate Committee on Privacy. He also served on the Senate Judiciary Committee. He was elected to and served in the California State Assembly from 1982 to 1993. Senator Peace is Chief Financial Officer of Four Square Productions, a multimedia company he co-founded in 1972. He earned a bachelor’s degree in political science from the University of California, San Diego.

The Finance Director receives a salary of $131,412. This position requires Senate confirmation.


Posted on Wed, Dec. 18, 2002

Medi-Cal cuts likely to hurt neediest most

By Robert Jablon


LOS ANGELES – Gov. Gray Davis’ proposed Medi-Cal cuts were condemned Tuesday by health care interests, welfare advocates and the disabled, who argued the cuts balance the budget on the backs of the state’s neediest residents.

“People will die,” said Rick Franz, 44, of Long Beach, who had polio as an infant. He and more than a dozen other people in wheelchairs attended a packed public hearing of the state Assembly budget subcommittee reviewing proposed cuts.

Davis this month proposed taking $2 billion from health and welfare programs that affect primarily the poor, elderly and sick. His recommendations include a 10 percent cut in state Medi-Cal payments to nursing homes, doctors and others.

Subcommittee members said that health cuts must be made, but that Davis’ plan goes too far.

“We can’t ask for sacrifices from those who can’t afford it while asking absolutely nothing from those who can,” said Assembly member Judy Chu, D-Monterey Park, who chairs the subcommittee on health and human services.

“It’s not surprising that the public is dissatisfied with the cuts. We didn’t expect them to embrace it,” said Russ Lopez, a spokesman for the governor. “But the reality is that we are expecting a huge budget shortfall and cuts will be part of the process. I don’t think we can avoid that.”

“We certainly don’t believe that the governor is unfairly targeting the needy,” he added.

Subcommittee members and representatives of medical supply companies, nursing homes, advocates for the poor, immigrants and the disabled argued that the cuts would actually increase budget problems.

Unable to afford early treatment, many would become sicker and eventually would require costlier emergency or hospital care, they argued.

Opponents especially attacked a proposed requirement that adults on Medi-Cal file a quarterly report on their financial status instead of once a year. Assemblywoman Jackie Goldberg, D-Los Angeles, said that would only save money by forcing eligible people off the rolls for making paperwork mistakes.

The requirement and a proposal to tighten the income eligibility for new Medi-Cal applicants could cause 319,000 people to lose health care coverage, according to the state Department of Health Services.

Davis has proposed the state stop paying for current now currently available to many adults on Medi-Cal. Those include dental care and payment for medical supplies such as colostomy bags, catheters and diabetic syringes.

Sharon Steele, 52, said she would be unable to afford the supplies on the $800 in take-home pay she makes as a church choir director.

“I wouldn’t be able to buy food or pay rent or anything,” said Steele, an insulin-dependent diabetic who uses a catheter because she lost her bladder to cancer.

Catheters cost up to $22 each. Steele uses 40 a month, not to mention gauze, antiseptic, insulin test strips, insulin and syringes, she said.

Eliminating payment for syringes and other items could lead to more blindness, heart and kidney disease and amputations among diabetics, testified Cristin Lis, an executive with the California Healthcare Institute, which bills itself as the advocate for the state’s biomedical industry.

Angela Gilliard, a legislative advocate with the Western Center on Law and Poverty, said the cuts will have a “ripple effect” on an already unstable health care system.

If the changes are adopted, a family of three would be ineligible for Medi-Cal coverage if members earned a total exceeding $763 per month, less than the going rate for a one-bedroom apartment, she said.

Davis proposed his cuts Dec. 6, saying he wanted to take $3.1 billion from public school spending and $2 billion from welfare and health care programs. He asked lawmakers to act by the end of January on those cuts, which include about $3.4 billion from the current $98.9 billion.

He will release his 2003-04 budget Jan. 10.

Tuesday’s hearing was one of several being held around the state to discuss the state’s budget crisis.

In Sacramento, state employee union leaders and others paraded before a state budget committee focusing on state administration.

Davis has asked the state’s personnel department to attempt to reopen contract negotiations with state workers to reduce the state’s payroll by $470 million, which would translate at a maximum to 7,000 layoffs or 8 percent pay cuts, according to union figures.

Davis plans to release his projections today for the state’s two-year deficit, which he has said could reach into the “high 20 billions.”

“When you see the figure you’ll realize we have a long way to go,” Davis told reporters Tuesday.

Anthony E. Wright

Executive Director

Health Access

1127 11th St., #234, Sacramento, CA 95814

Ph: 916-442-2308, Fx: 916-497-0921

Health Access California promotes quality, affordable health care for all Californians.
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