The November budget fight…

Thursday, November 6th, 2008


* Gov. Schwarzenegger calls a “lame duck” Legislature back into special session
* Proposes $4.5 billion in cuts, on top of $10 billion already made in 2008-09 budget
* Proposes $141.9 million in health cuts in 08-09, which grow to $1 billion/year in out years
* Proposes 1.5-cent sales tax increasem, other revenues

* Click here for a look at what’s new on the Health Access Weblog: Budget misery, the presidential election, the prospects of health reform under President Obama.
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Health Access’ 20th Anniversary Celebration, November 20th

Gov. Arnold Schwarzenegger today called lawmakers back to Sacramento to help close a new and growing deficit of $11 billion. The governor said he was driven to re-open the budget, which was signed into law just six weeks ago, because Californians “don’t have the luxury of waiting until January’’ when governor’s typically introduce the first draft of their spending proposals.
“We have a dramatic situation that requires a dramatic solution,” said Schwarzenegger, citing the 20 percent drop in the country’s stock market.

To bridge the gap, Schwarzenegger has proposed $4.5 billion in cuts – including $141.9 million in health care cuts this year alone. The cuts grow in future years, as would impact on families needing health care services.

The Republican governor has also proposed a temporary 1.5-cent sales tax increase, along with elevating vehicle registration fees by about $23 per vehicle. The revenue increases are expected to raise $4.4 billion.

Health and other advocates appreciate that the Governor is supporting specific taxes to prevent even worse cuts, and rejecting a cuts-only approach to find a budget solution. However, the revenues proposed don’t match the cuts that have already been made in the past few months and years, much less the new, additional cuts proposed today.

It is unclear, however, whether the governor will be able to garner enough Republican votes to pass these increases, to get the needed 2/3 of the legislature. He was unable to convince his fellow party members earlier this year.


The health cuts proposed by Schwarzenegger revisit familiar territory from previous budget fights, including the most recent. These are largely cuts that have been rejected by the Legislature as too severe, earlier this year and in previous years.

The proposed health cuts would mean hundreds of thousands of Californians would lose coverage, and millions would lose dental, vision, podiatry, and other vital benefits. There are specific cuts to seniors, immigrants, public hospitals, and other groups. These cuts will also mean California will lose federal matching funds, further harm our already broken health system, and our economy.

Two specific cuts of note:

* Denying low-income working parents Medi-Cal coverage, by lowering the eligibility from 100% to 72% of poverty level, cutting off eligbility for parents in families of three making more than $13,000. The cut would be $8.6 million in 2008-09; $109 million in 2009-10, and $342 million in 2011-12, ultimately impacting over 429,000 California parents.

* Eliminating dental, vision, podiatry and several other benefits for the three million parents, seniors, and people with disabilities on Medi-Cal coverage. The cut would be $41 million in 2008-09, and $129.9 million in 2009-10.

Other cuts would increase health costs with seniors, limit benefits for legal immigrants, and shift funds away from public hospitals.

For a complete list of mid-year health-related budget-reduction proposals, visit our website:

For a list of the final budget cuts sustained for the enacted 2008-09 budget, visit our website:

Because one-third of the fiscal year is already over, cuts to health care in the 2008-09 fiscal year, which include sharp cuts to eligibility and benefits for the lowest income Californians, are relatively modest at $142 million. Cuts actually grow in their impact, to over $700 million in 2009-10, and to nearly $1 billion in out years.

These cuts come on top of $615 million in reductions already made to health care services earlier this year.


Schwarzenegger is hoping lawmakers act fast. The current batch of legislators will see their terms expire on November 30th. While some will undoubtedly return December 1, there will be 24 brand new Assembly members, who have never been immersed in state budget complexities. Senate President Pro Tempore Don Perata applauded the governor’s quick action, but said he was unwilling to make deeper cuts.

“Over the summer, Democrats agreed to $10 billion in deep cuts, and we have cut all the way to the bone,’’ said Perata in a statement. “…the Governor’s plan to slash assistance to the poor and the needy while raising their taxes is an unacceptable double blow to California’s most vulnerable citizens.’’

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

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