Budget blow-by-blow…

Wednesday, September 17th, 2008

* Legislature passes budget 78 days late; Budget includes steep cuts, gimmicks, no taxes
* Governor vows to veto budget, demands more cut authority; Legislature likely to override
* ACTION: Health advocates to Legislature: Fix budget & raise revenues to prevent cuts

Click for What’s New on the Health Access WeBlog: More on Budget Back-and-Forth; Assessing the Deficit Reduction Act Reporting Requirements; Healthy San Francisco Examined; Governor Palin and Health Care; House Parties for Health Care and More…

The Legislature ended its 78-day budget impasse in the wee hours Tuesday morning, passing a spending plan with biparisan votes for the plan, but no lawmaker in favor. The final votes was 61-1 in the Assembly (54 votes were needed) and 28-12 in the Senate (27 votes were needed).

Assemblyman John Laird, the Assembly Budget Committee Chairman said, “This isn’t what everyone liked…but everyone had a greater fear that they are not realizing in this budget.’’

The budget bridges a $15.2 billion shortfall through significant cuts to education, health care and other vital services; and by various gimmicks, including claiming tax returns a little bit earlier (only to lose those earnings in the *following* fiscal year), borrowing against future lottery income, and limiting tax writeoffs for businesses in the short-run (but losing income in future years).

Many advocates observe that the budget not only makes tough cuts this year, but actually makes the budget crisis worse in future years, forcing additional pressure for cuts to health and other vital services.

Governor’s veto threat

Gov. Arnold Schwarzenegger, however, almost immediately vowed to veto the measure, accusing lawmakers of “living in debt and denial’’ and said the budget “takes our problems and makes them even worse.’’

Schwarzenegger is calling for even sharper spending restrictions, which include a 12.5 percent reserve, and further restrictions on when the money is used. Health advocates have noted that the “rainy day” fund would be an additional spending priority without any new funding, and thus would compete with health and other existing programs, increasing the pressure for cuts.

Legislature likely to override

The governor’s veto announcement prompted Legislative leaders to declare that they would unite to override his veto. “If we bring 120 legislators up here to override a veto, I’m pretty confident we’re not going to have difficulty doing that and we would do it in rapid fire,’’ said Assembly Speaker Karen Bass.

ACTION: At press conferences in Sacramento and elsewhere, several education, health care, and human services organizations, including Health Access California, will call on Legislative leaders this morning to not override the veto, and instead get back to work on a budget that provide ongoing solutions for the budget crisis, including increased revenues to prevent cuts now and in the future.

Legislative leaders, however, say they have little hope of raising revenues this year as Republicans have pledged — as they have in past years — to vote against any tax increases whatsoever.

Budget impacts on Health Care

The effect of the current budget — or any budget that does not contain a permanent new revenue source — is that California will continue to face structural deficits. That means budget fights, such as the ones Californians have been subjected to this past decade, will continue until the state finds a permanent way to pay for its needs.

The immediate cuts in the budget deal include:
* increased reporting (every six months in Medi-Cal) with the purpose of having over 250,000 children lose coverage.
* increased Healthy Families premiums.
* delayed (until March 2009) restoration of the 10 percent Medi-Cal provder rate cut, leading to an additional loss of hundreds of millions of dollars in federal matching funds.

For more details on reductions to the health services budget (as well as which proposed cuts were prevented), please visit see the Health Access Budget Cuts Scorecard, at:

Health Access will continue to update advocates about budget goings-on. For more information, contact the author of this report, Hanh Kim Quach, at hquach@health-access.org.

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

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