California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

Gov. Brown Says Deficit Could Be Bigger Than Estimated, Calls for Cuts

On Friday, Gov. Jerry Brown (D) acknowledged that California's budget deficit likely is larger than he previously estimated and called for state legislators to enact significant spending cuts, the Sacramento Bee's "Capitol Alert" reports.

Brown's Comments

The governor -- in an interview with San Francisco Bay Area radio station KGO  -- said the deficit is "probably bigger now" than the $9.2 billion he estimated in his fiscal year 2012-2013 budget plan. He said, "That's why the Legislature has to man up, make the cuts and get some taxes, and we'll make it" (Siders, "Capitol Alert," Sacramento Bee, 4/13).

A spokesperson for Senate President Pro Tempore Darrell Steinberg (D-Sacramento) said Democrats plan to wait until state income figures are released next month before considering deep cuts to state services (York, "PolitiCal," Los Angeles Times, 4/14).

Brown's Proposed Cuts 

Brown's $92.6 billion spending plan calls for cutting:

  • $946.2 million from CalWORKs -- the state's welfare-to-work program -- by limiting the amount of time most adults could be on the program from four years to two years;
  • $842.3 million from Medi-Cal -- California's Medicaid program -- by merging services for beneficiaries eligible for both Medi-Cal and Medicare;
  • $163.8 million from In-Home Supportive Services -- which provides services for the elderly and people who are blind or have disabilities -- by eliminating domestic assistance for beneficiaries in shared living environments; and
  • $64 million from Healthy Families, California's Children's Health Insurance Program, by moving children out of the program (California Healthline, 2/28).

Compromise Tax Plan

In the KGO interview, Brown also promoted a compromise tax plan that he developed along with supporters of the "Millionaires Tax" ("Capitol Alert," Sacramento Bee, 4/13).

Brown recently announced a deal to merge the two proposals into a new single initiative for the November ballot.

The newly revised tax plan includes a smaller sales tax hike and a larger personal income tax increase on the wealthy than Brown initially had proposed.

The new proposal would:

  • Increase the personal income tax by one percentage point for individuals who earn $250,000 annually or couples who earn $500,000 annually and by two percentage points for individuals who earn $300,000 annually or couples who earn $600,000 annually;
  • Extend the income tax increases on wealthy residents from five to seven years; and
  • Increase the sales tax by a quarter of a cent, down from Brown's original half-cent increase.

The sales tax hike would expire in four years, as called for in Brown's original plan.

The merged plan would raise an estimated $9 billion over the next fiscal year, $2.1 billion more than Brown's original proposal.

The compromise plan is rivaled by a plan by attorney Molly Munger, called "Our Children, Our Future." Munger's plan aims to raise income taxes for all residents, with the highest earners seeing the largest hike. Most of the funds raised would support education programs (California Healthline, 5/13).

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