LAO Estimates That California Won’t Hit Stimulus Threshold
California likely will have to further increase taxes and cut Medi-Cal and other services because the state probably will not receive at least $10 billion toward general fund spending from the federal economic stimulus package, Legislative Analyst Mac Taylor told the Assembly Budget Committee Tuesday, the Sacramento Bee reports.
Medi-Cal is California's Medicaid program (Sanders, Sacramento Bee, 3/11).
Taylor estimates that California will receive almost $31.5 billion from the stimulus through mid-2011 (Yi, San Francisco Chronicle, 3/11).Â About $8 billion will be available for budget relief through 2010, according to Taylor's report.
The state budget agreement Gov. Arnold Schwarzenegger (R) enacted last month stipulates that the state could avoid further tax increases and spending cuts if it received at least $10 billion from the stimulus package for budget relief (Bailey/McGreevy, Los Angeles Times, 3/11).
If stimulus funds do not hit that threshold, Medi-Cal would terminate some benefits beginning July 1. For example, Medi-Cal would stop covering adult dental services and podiatry (Sacramento Bee, 3/10).
The state personal income tax also would increase by a quarter percentage point (Los Angeles Times, 3/11).
In his testimony, Taylor said California law must restore the Medi-Cal eligibility rules that were in place on July 1, 2008, to receive additional federal funds for the program.Â
Since that date, California has increased eligibility verification checks for kids Medi-Cal covers to twice annually.
Taylor said that the policy change must be "reversed" by July 1 to receive the stimulus funds, but he urged lawmakers to approve the change sooner.
However, the Ventura County Star reports that it is unclear whether the policy must be permanently reversed or if a temporary suspension of the more frequent eligibility verifications would suffice.
H.D. Palmer, a spokesperson for the state Department of Finance, said the Schwarzenegger administration is asking for the requirement to be suspended rather than revoked altogether.Â Palmer said he misspoke last week when he told the Star that the rule needed to be revoked (Herdt, Ventura County Star, 3/11).
What Comes Next
The state Legislature charged state Treasurer Bill Lockyer (D) and Finance Department Director Mike Genest with determining whether California will hit the $10 billion mark in stimulus funds.Â Lockyer and Genest must make the call by April 1 (Los Angeles Times, 3/11).
Taylor's estimate is consistent with the numbers the state Department of Finance reached last week, but Taylor said that the situation is complicated because of ambiguity in how to account for some funds.
Lockyer spokesperson Tom Dresslar said that the treasurer's office has hired a consultant and will be developing its own estimate (Sacramento Bee, 3/11).
Lockyer and Genest will hold a meeting on stimulus funds for California next week (Los Angeles Times, 3/11).
On Tuesday, KQED's "Radio News" included a discussion with KQED Sacramento Bureau Chief John Myers about Taylor's report (Musiker, "Radio News," KQED, 3/10).In addition, KPCC's "Air Talk" included a discussion with Jean Ross of the California Budget Project about stimulus funding for California (Mantle, "Air Talk," KPCC, 3/10). 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.