May 15, 2003 --Information on California Budget May RevisionSome highlights of Davis' new $95.8 billion fiscal 03-04 budget: (7-1-03 through 6-30-04) and comments by Health Access on its effects on health care:
How Davis intends to erase long-term $38.2 billion deficit through June 30, 2004:
** $18.8 billion in cuts and savings, one of the highest cuts in history.
** Current fiscal year's shortfall of $10.7 billion paid by a 5-7 year deficit bond to be financed with a temporary half-cent sales tax increase until deficit disappears. (Tax begins Oct. 1, 2003, and will raise $1.7 billion through June 30, 2004, then $2.3 billion each year afterward. Bonds to be administered by new agency.)
** $2.9 billion in loans and borrowing.
** $1.7 billion in programs shifted to local governments (realignment) including mental health, welfare, and foster and other children's' care, and funded by hiking income taxes on the state's wealthiest residents (raised 1% to 10.3% for above $150 thousand single or $300 thousand married) and 63-cent tax hike per pack of cigarettes. ($10 million in re-alignment had been proposed in January.) Under new realignment, state contributions capped by income from the above dedicated revenues, counties must pay additional costs.
** $3.9 billion in money borrowed and transferred from special state funds, including tripling vehicle license fees to bring them back to 1998 levels, money to go to counties.
** Upward revise of January's $35 billion shortfall mainly based on increased use of government assistance because of recession, to lesser extent on lower tax revenues. Medi-Cal enrollment, for instance, rose 9% from 5.8 million to 6.3 million over year from January 2002.
** Davis says if May revised budget accepted and shortfall erased to July 2004, by July 2005 there would be a new budget shortfall of some $9 million unless more cuts made this summer.
HEALTH ACCESS UPDATE Wednesday, May 14th, 2003
MAY REVISE UPDATE
For a complete Health Access breakdown of Medi-Cal cuts: http://home.attbi.com/
mlyon01/articles/ha5-14.doc
** Some Health Cuts Withdrawn; Most Cuts Still Under Consideration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 http://www.dof.ca.gov/HTML/BUD_DOCS/Bud_link.htm.
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.
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.
Anthony E. Wright Executive Director, Health Access
1127 11th St., #234,
Sacramento, CA 95814
Ph: 916-442-2308,
Fx: 916-497-0921
awright@health-access.org