LAO Says Budget Deficit Likely Higher Than Gov. Brown’s Recent Estimate
The state budget deficit likely is higher than Gov. Jerry Brown's (D) estimate of $15.7 billion, according to a report by the Legislative Analyst's Office, the Sacramento Bee's "Capitol Alert" reports (Yamamura, "Capitol Alert," Sacramento Bee, 5/18).
Recently, Brown announced that the state budget deficit has grown almost twice as high as his original estimate of $9.2 billion in January. He said that the higher deficit estimate is the result of a slow economic recovery and decisions by the federal government to block proposed state spending cuts (California Healthline, 5/14).
Last week, Brown released his revised fiscal year 2012-2013 budget plan, which incorporated the new estimate.
The $91.4 billion revised budget plan calls for cutting:
- $1.2 billion from Medi-Cal -- California's Medicaid program -- by merging services for beneficiariesÂ eligible for both Medi-Cal and Medicare and reducing payments to hospitals and nursing homes;
- $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;
- $225 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 reducing worker payments by 7%; and
- $64 million from Healthy Families, California's Children's Health Insurance Program, by moving children out of the program.
In addition, the revised budget plan calls for transitioning most state employees to a four-day, 38-hour workweek.
The revised budget plan relies on revenue from a compromise tax hike initiative that Brown is trying to qualify for the November ballot. The budget plan assumes $8.5 billion in new revenue from the tax hike (California Healthline, 5/17).
Details of LAO Report
LAO examined the revised budget plan and found that:
- Brown's revenue forecast is "reasonable," but likely $550 million too high; and
- Brown's estimate of money available from former redevelopment plans might be overstated by $900 million.
Based on the findings, LAO indicated that the state budget deficit is somewhere above $17 billion, according to "Capitol Alert." The LAO report specifically stated only that the deficit is "likely somewhat larger" than Brown's recent estimate ("Capitol Alert," Sacramento Bee, 5/18).
The report recommended that lawmakers reject the governor's revised budget plan and that the Brown administration submit a more detailed proposal to lawmakers (Sacramento Business Journal, 5/18).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.