LAO: California’s Revenues Could Be $2B Higher Than Brown Projects
California could collect up to $2 billion more in tax revenue than Gov. Jerry Brown (D) projected in his fiscal year 2015-2016 budget proposal, but little -- if any -- of that money would be spent on health care, according to a report released Tuesday by the Legislative Analyst's Office, the AP/Miami Herald reports (Thompson, AP/Miami Herald, 1/13).
Background on Budget Proposal
Last week, Brown released his $113.3 billion FY 2015-2016 budget proposal.
According to the budget, Medi-Cal will account for two-thirds of overall health and human services spending in the coming fiscal year. Medi-Cal is California's Medicaid program.
Meanwhile, Brown's office in a release also noted that unfunded liability in the state's retiree health care programs currently is an estimated $72 billion. To address the unfunded liability, the budget plan proposes that "the state and its employees ... share equally in the pre-funding of retiree health benefits, to be phased in as labor contracts come up for renewal." The budget estimates that such a move would result in savings of nearly $200 billion over the next 50 years.
The proposal also includes continued funding for overtime pay for In-Home Supportive Services. Specifically, Brown's proposal would end a 7% reduction in IHSS hours.
Further, the budget would allocate about $300 million for high-cost drugs, including expensive medication to treat hepatitis C.
However, the proposal lacks funding to provide health coverage to undocumented immigrants in the state (California Healthline, 1/13).
Details of Report
According to the LAO report, California's revenue could be $1 billion to $2 billion higher than projected in Brown's budget proposal (AP/Miami Herald, 1/13).
However, the report noted that all of the extra revenue would go toward education, as stipulated under the state's constitutional school-funding formula (Siders/Miller, "Capitol Alert," Sacramento Bee, 1/13).
The funding likely would go to education despite pressure to increase spending on health care and other social programs, according to the AP/Miami Herald (AP/Miami Herald, 1/13).
Overall the report lauded Brown's proposal as "generally prudent," noting that it could help avoid a return to the "boom-and-bust budgeting of the past."
Specifically, LAO praised Brown for his plans to address the near $72 billion in unfunded liability for retiree health care (Megerian, "PolitiCal," Los Angeles Times, 1/13). However, the report questioned the lack of specifics on how the governor's administration intends to cover the unfunded liability.
"The administration does not recognize the costs of the ambitious retiree health proposal in its multiyear budget project," according to the LAO report ("Capitol Alert," Sacramento Bee, 1/13).
Meanwhile, the report also noted that:
- LAO will continue to evaluate enrollment estimates driving California's proposed spending on Medi-Cal; and
- The proposed budget likely will need to be adjusted because of the uncertainty of the actual costs for expensive hepatitis C treatments (Taylor, LAO report, 1/13).