Showdown in the Senate

Tuesday, February 17th, 2009

* Vote Scheduled for 10am; Steinberg Vows to Lockdown Senate Until Budget Agreement
* All Dems Voting for Package, But 3rd Republican Vote Required to Meet 2/3 Threshold
* Package Would Have Severe Health Care Impacts: Cut Counties , Redirect First Five Funds
* Cuts to Medi-Cal Benefit & Public Hospital Dependent on Amount of Federal Economic Aid
* State Budget Alert: State Spending Cap Could Force Cuts Forever Into the Future

New on the Health Access WeBlog: More on the Budget and the Spending Cap; Responding to Sen. Cox on Children’s Coverage; Responding to Sen. Hollingsworth on Jobs; Julio Osegueda from McDonald’s as Obama’s Health Care Spokesperson?; Twittering the Budget Debate; Flap Over First Five Commission; St. Valentine’s Day Massacre; More Reasons to Oppose a Spending Cap; Comparative Goals for Comparative Effectiveness; Where This Budget Leaves Us; Capps Gets Key Roles on Committee, Continues California’s Strong Voice on Health; News on the Economic Recovery Act

After marathon legislative sessions that started the evening of Valentine’s Day, stretched into the night and morning, and then through President’s Day weekend, a state budget proposal to fix the $42 billion hole in the current and next year has yet to get the necessary Republican votes to pass.

THE POLITICAL SITUATION: At a 7:30pm session Monday evening, Senate President Darrell Steinberg laid out the consequences of not passing a budget on Wednesday: 20,000 state employees get laid off, 276 construction projects and even more transportation projects to get stopped, leading to tens of thousands of more private sector jobs losses.

Senator Steinberg laid out the political situation from his point of view. There’s a 2/3 majority to vote for the current budget package in the Assembly, and all Democrats are voting for it in the Senate, but there aren’t the needed votes from Republican Senators.In order to “spotlight” the problem, he’s adjourning the session tonight, but will have the vote at 10am tomorrow, and will place it “on call until we get it done.” He promised to keep everybody in the Chamber until a budget was passed: “Bring a toothbrush!” He added: “I will not allow anyone to go home, to resume their life, to have any kind of resumption of normal business” until a budget is passed.

With expectation that the full Democratic Caucus will vote for the budget package, with the assumption that Republican Senators Dave Cogdill of Fresno and Roy Ashburn of Bakersfield will join them, speculation for the third vote has centered around Senator Dave Cox of Sacramento or Senator Abel Maldonado of Santa Maria . Both argued against the package Monday night, although its unclear if they would support the package with some modifications.

THE PACKAGE: The budget package was negotiated between Governor Arnold Schwarzenegger and legislative leaders of both parties, the so-called “Big Five.”

Even after $19 billion in cuts in the past three years, it includes an additional $15 billion in spending reductions, as well as $14.4 billion in new and increased (but temporary) taxes, and $12 billion in borrowing.

The package also includes rollbacks of worker and environmental protections, some corporate tax giveaways, and pending a May 19th ballot vote, a spending cap and redirection of money raised by Propositions 10 and 63.

An Assembly document summarizes the provisions of the over two dozen bills. The bills of interest to health advocates includes (with the Assembly and Senate versions identical):

* Mid-year adjustments in the 2008-09 budget: ABxxx 1 (Evans), SBxxx 1 (Ducheny)
* The 2009-10 budget bill, with reductions: ABxxx 2, (Evans), SBxxx 2 (Ducheny)
* The health trailer bill: ABxxx 5 (Evans), SBxxx 5 (Ducheny)
* The general government trailer bill: ABxxx 8 (Evans), SBxxx 8 (Ducheny)

* Changes to Prop 10 (tobacco tax for children’s services): ABxxx 9 (Evans), SBxxx 9 (Ducheny)* Changes to Prop 63 (high income tax for mental health): ABxxx 10 (Evans), SBxxx 10 (Ducheny)
* Setting an election for May 19, 2009 to consider several items: ABxxx 11 (Evans)

* Temporary tax increases: SBxxx 3 (Ducheny)
* The constitutional amendment for a spending cap ACAxxx 2 (Bass)

THE HEALTH IMPACTS: If this budget is approved, it will have significant impacts on health care, now and into the future. The biggest impact would be the spending cap, which would force cuts into the future. And don’t forget the over $1 billion in permanent tax cuts and giveaways that will create budget pressure in future years to make further cuts, especially after the temporary increases expire.

The specific cuts and impacts on health care fall into three categories.

* CUT NO MATTER WHAT: Amidst very serious cuts to human services, there a $24.7 million health cut to counties from suspending the 2009 cost-of-doing-business increase for Medi-Cal administration, which means fewer county workers to enroll and process Medi-Cal applications for families. There were much more significant human services cuts as well.

While the package includes increased taxes to raise revenues during this significant downturn, they are temporary. There are corporate tax breaks, however, that are permanent. Such tax breaks reduces the ongoing general fund dollars that are available for health, education, and other core services, creating greater pressure in future years to further cut these areas.

* CUTS DEPENDING ON THE AMOUNT OF FEDERAL HELP: The proposals would cut $183.6 million from health care, but this amount is included in a section that will “trigger off” depending how much money California gets from the federal economic recovery package. Director of Finance Mike Genest and Treasurer Bill Lockyer are to determine by April if we get over $9.1 billion in general fund money in the requisite period of time, which then will allow them to prevent these and other significant cuts. The potential cuts in health care include:

o a 10% cut to public hospital reimbursement rates (the Safety Net Care Pool), and

o eliminating specific Medi-Cal benefits for 3 million parents, seniors, and people with disabilities (Health Access has a fact sheet on the financial and health impacts if these benefits are cut) including:
§ Adult dental
§ Acupuncture services
§ Audiology Services and speech therapy services
§ Chiropractic services
§ Optometric and optician services, including services provided by a fabricating optical lab
§ Podiatric services
§ Psychology services
§ Incontinence creams and washes

* DEPENDING ON A VOTE OF THE PEOPLE: Several components of this plan would require voter approval, since they are either modifying initiatives that were previously approved by the voters, or changing the Constitution. These and other elements are proposed to be placed on the ballot on May 19th, 2009:

o Two different proposals would redirect some but not all funds from Prop 10 (tobacco tax for services for children 0-5) and Prop 63 (upper-income tax for mental health services).

Proposition 10, the California Children and Families Act of 1998, is a major funder of children’s programs throughout the state, including county-based “Healthy Kids” programs, which are models of how to get to universal children’s coverage. The budget transfers Prop. 10 reserve funds of $340 million in the current year to fill the general fund deficit, and then proposes to transfer $268 million annually for five fiscal years to the general fund. This would severely curtail those programs and services funded by Proposition 10 dollars.

o A spending cap would also be on the ballot for voters approval, which would limit California ’s ability to invest in health, education and other vital services, and in fact is projected to force steep cuts every year into the future. It would be tied to extensions of the temporary tax increases. If the cap is approved, the temporary taxes last for five years; if the cap is defeated, the taxes are in place for only two years.

For health care, the concern is that a artificial spending cap would lock us in to the current broken, resource-starved health system that we all rely on, which includes over six million uninsured Californians and the lowest per-patient Medicaid spending in the nation. As the limit does not take into account medical inflation or the costs of an aging population, health care would be particularly vulnerable under the cap, and the cap would thus force cuts into existing programs and services, and prevent ever addressing unmet needs.

The budget is still a fluid document, especially as legislative leaders and the Governor seek an additional vote for its passage. More analysis about the budget is being posted regularly, and is available on the Health Access daily blog, at:

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

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