Davis to Release Revised Budget Proposal Today; Health Care Reductions Expected

Gov. Gray Davis (D) plans to release his revised fiscal year 2002-2003 budget proposal today, and the New York Times reports that a "potentially catastrophic" deficit could force reductions in health care services (Sterngold, New York Times, 5/12). In January, Davis anticipated a shortfall of $12 billion for the remainder of the fiscal year and all of the next fiscal year. However, the latest estimate from the state Legislative Analyst puts the figure at $22 billion as a result of a "sharp drop in revenues" (Seiler, Orange County Register, 5/12). Davis has pledged not to raise taxes, and in his revised plan, social services are expected to "absorb much of the blow" (Hill, Sacramento Bee, 5/14). The AP/Orange County Register reports that health care advocates are preparing for "deep cuts" in Medi-Cal reimbursements to providers. Davis may also delay a planned expansion of Healthy Families to cover the parents of eligible children with incomes less than 200% of the federal poverty level. Some lawmakers predict that the budget will fully eliminate some programs (Haussler, AP/Orange County Register, 5/14). Los Angeles County, which relies on state funds for its "extensive health care programs," is concerned about possible health care reductions, the New York Times reports (New York Times, 5/12). Despite Davis' pledge not to raise taxes, Sen. Steve Peace (D-El Cajon) said the chances are "50-50" that the Legislature will approve a budget with tax increases (Sacramento Bee, 5/14). Republicans, however, have said they will oppose tax increases to cover the shortfall (AP/Orange County Register, 5/14).