Calif. Lawmakers Mull Options for Dealing With Budget Deficit
Today is the constitutional deadline for California lawmakers to approve a budget, the date that Controller John Chiang (D) cited as the cutoff for the state to secure emergency loans, the San Francisco Chronicle reports. Chiang has said the state would run out of cash by July 28 unless legislators address the deficit.
Gov. Arnold Schwarzenegger (R) said he and administration officials "all agreed that after June 15, every day of inaction jeopardizes our state's solvency and our ability to pay schools and teachers and keep hospitals and [emergency departments] open."
Pressure Mounting in the Legislature
Today, the Legislature's Conference Committee on the Budget is working to explore proposals for closing the budget gap.
Democratic lawmakers oppose Schwarzenegger's plan to eliminate health and social programs such as Healthy Families, California's Children's Health Insurance Program (Yi, San Francisco Chronicle, 6/15).
Senate President Pro Tempore Darrell Steinberg (D-Sacramento) said Senate Democrats are "in agreement that in the health and human services area, there needs to be cuts in every program." Steinberg added that the extent of the cuts is "a matter of degree" (Sweeney, San Diego Union-Tribune, 6/14).
Many Democrats also say they will not support a budget plan unless it includes new sources of revenue.
However, Schwarzenegger and Republican legislators say they oppose tax increases.
Steinberg said he is "confident" that state lawmakers will resolve the budget gap by June 30, which he considers to be "really the deadline" (San Francisco Chronicle, 6/15).
IOUs on the Table
If lawmakers fail to work out a budget plan by the end of June, California might need to issue IOUs instead of making payments, state finance officials said (Wiegand, Sacramento Bee, 6/14).
Chiang said he would consider IOUs only as a last resort.
If the state is forced to delay payments, funding priorities go first to education and debt, and then to:
- Special funds;
- Pension obligations;
- Payroll; and
- Medi-Cal, California's Medicaid program (San Francisco Chronicle, 6/15).
Last week, Schwarzenegger said he would not approve issuing revenue anticipation warrants if lawmakers do not balance the budget by July 1 (Sacramento Bee, 6/14).
Local Governments Could Be Spared
Last week, Schwarzenegger also backed away from his proposal to address the budget shortfall by borrowing nearly $2 million from local governments. He said the plan encountered substantial opposition from both parties.
As an alternative to borrowing from local governments, Finance Director Michael Genest has suggested making additional cuts to health care for state workers, foster care and other programs, Schwarzenegger said (Marelius/Gao, San Diego Union-Tribune, 6/13).
Federal Funds in Jeopardy
Various proposals to reduce state spending also could result in the loss of more than $9 billion in federal matching funds or grants, according to the Legislative Analyst's Office and the state Department of Finance.
For example, a proposal to eliminate Healthy Families would reduce state spending by $400 million but could deny the state up to $800 million in federal matching funds.
In addition, the governor's plan to cut $1.4 billion from Medi-Cal could cost the state $2.4 billion in federal funds (San Diego Union-Tribune, 6/14).
Although California "needs to tighten its belt," it is "foolhardy to eliminate programs that will only drive up health care costs as a result of increased emergency room visits and cost the state tremendous funding from the federal government," Castulo de la Rocha, president and CEO of AltaMed Health Services, writes in Sacramento Bee opinion piece.
De la Rocha continues that eliminating Healthy Families and programs for the elderly "will result in increased long-term and short-term costs rather than saving money," concluding that the state should pursue alternatives to cutting these programs (de la Rocha, Sacramento Bee, 6/13).
Senior, Disabled Services
Headlines and links to stories about the implications of the governor's budget proposals for home care programs and adult day health care services appear below.
- "Thousands of Modesto-Area Seniors, Disabled Might Lose Caregivers" (Carlson, Modesto Bee, 6/13).
- "Cuts Could Send Seniors Living at Home to Nursing Homes" (Mitchell, Chico Enterprise-Record, 6/12).
- "Adult Day-Care Cuts Could Be 'Catastrophic'" (Schelden, Orange County Register, 6/14).
- "Advocates for Long-Term Care Residents Hit by Budget Cuts" (Aragone, San Mateo County Times, 6/14).
- "Governor Wants To Close Adult Day Health Care Centers" (Kisken/Wilson, Ventura County Star, 6/14).
Other Budget Coverage
- "California's Locked-Up Children Languish Without Mental Health Services" (de SÃ¡, San Jose Mercury News, 6/15).
- "Health Programs Could Face the Ax" (DarcÃ©, San Diego Union-Tribune, 6/14).