Wednesday, May 14th, 2003


* Some Health Cuts Withdrawn; Most Cuts Still Under Consideration

* Additional Revenues Needed to Restore Severe Cuts to Health and Other Vital Services

This afternoon, the Governor released his May Revision of the budget, which sought to address a revised $38.2 billion budget gap in the state budget. It is available at

REVENUES: The budget would raise some revenues, although none directly for the general fund.

* The proposal would “finance the deficit” by issuing a $10.7 billion bond, paid back with a temporary half-cent sales tax increase that raises $1.7 billion in 2003-04, and $2.4 billion in subsequent years.

* The Governor’s proposal for realignment, shifting state programs to the county level, has been scaled back (from $8.3 billion in the January budget) to $1.8 billion for 2003-04. This would be financed by an increases in taxes for tobacco and those in the upper tax bracket (which are more modest than those proposed in the January budget).

* Finally, the proposal expects that local government’s vehicle license fee will be restored to levels before they were reduced, raising $4.2 billion.

Also of note, the budget does not rely on the previously-agreed plan to sell the remaining bonds that would securitize tobacco settlement revenue.

HEALTH IMPACT: For health advocates, the news continues to be a mix of the good, the bad, and the ugly. ATTACHED is an updated scorecard that indicates the current status of all the proposed health care cuts.

THE GOOD: Recognizing the severity of the proposed Medi-Cal cuts, the Governor has withdrawn a couple of his proposals, including:

* the “1931b” eligibility cut that would have denied basic Medi-Cal coverage hundreds of thousands of low-income working parents who fall under the federal poverty level;

* the cut that would have eliminated a few of the “optional” yet medically necessary benefits, including orthotics, prosthetic limbs, hospice care, medical transportation, and family planning devices; and

* the realignment proposals for counties to pick up the responsibility for 15% of the cost of Medi-Cal, and for various “Healthy Communities” public health programs that fund community clinics and other providers. The Governor will defer consideration of a broader realignment effort until the next budget cycle.

THE BAD: The Governor’s proposal still includes the bulk of the proposed cuts to Medi-Cal, that would deny access to basic care and services to millions of Californians. The proposal still would:

* Impose a requirement for low-income working parents to file quarterly status reports, for the express purpose of having hundreds of thousands fall off Medi-Cal coverage;

* Eliminate a range of 14 medically necessary benefits for around 3 million parents, seniors, and people with disabilities on Medi-Cal, including medical supplies, dental, vision, medical equipment, hearing aids, rehab therapy, and others.

* Reduce Medi-Cal provider rates by 15%, which would lead some doctors, nursing homes, and health providers to not provide care to the 6.5 million Californians on Medi-Cal.

THE UGLY: The overall package, including the deficit financing, leaves a system that would keep health care services vulnerable to major cuts in future years. The Governor and Director of Finance Steve Peace stressed that this is an attempt to break through the current legislative gridlock and pass a budget on time, but that it does not solve the ongoing problems.

In the introduction, the document summarizes this point: “The May Revision proposal will balance the 2003-04 Budget, finance the current year deficit in a prudent and credible way, and close a substantial portion of the structural deficit. But it will require that the Legislature continue work on structural issues after the budget is passed.”

Ultimately, health advocates should to organize and argue for the additional revenues needed to sustainably fund the health care and other vital services on which Californians rely.

BUDGET ALLIES MEETING: Sacramento-based advocates are invited to a “Budget Allies” meeting scheduled for MONDAY, MAY 19th at 12:00noon, at the conference room of the California Labor Federation, 1127 11th Street, Suite 425. The agenda includes an overview of the May Revise by Jean Ross of the California Budget Project and others; an update on the Budget Accountability Act effort; multiple organizations will discuss the coalition activities they are planning around the budget in the next few weeks. Feel free to bring your lunch.

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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