LAO: Governor Should Not Rely on Federal Aid To Patch Deficit
Congress is unlikely to fulfill Gov. Arnold Schwarzenegger's (R) request for $6.9 billion in increased federal funding, Legislative Analyst Mac Taylor said Tuesday during his preliminary budget review, the Sacramento Bee reports.
Taylor estimated that California would receive about $3 billion in federal aid, less than half of Schwarzenegger's request (Yamamura, Sacramento Bee, 1/13).
Taylor also predicted that a federal cash infusion would likely come as one-time stimulus extensions for programs like Medi-Cal, California's Medicaid program (Theriault, San Jose Mercury News, 1/12).
The Legislative Analyst's Office estimates that California faces a $20.7 billion shortfall over the next 18 months, slightly more than the $19.9 billion deficit included in the governor's budget estimate (Robertson, Sacramento Business Journal, 1/12).
Evaluation of Governor's Proposals
Taylor commended the governor for offering a budget plan that includes backup provisions in case the federal government refuses to provide financial assistance.
If the state secures no federal funds, Schwarzenegger's "trigger" cuts would eliminate:
- Healthy Families, California's Children's Health Insurance Program;
- In-Home Supportive Services; and
- The state's CalWORKS welfare program.
Taylor cautioned against the wholesale elimination of safety-net programs and recommended pursuing more targeted cuts to preserve services for the most vulnerable residents.
He also suggested that severe cuts to IHSS could drive more low-income people into nursing homes and escalate Medi-Cal costs (Sacramento Bee, 1/13).
In addition, Taylor criticized Schwarzenegger's plan to reduce prison health care spending. He also predicted that courts could challenge a proposal to raise state worker pension contributions (San Jose Mercury News, 1/12).Taylor called for state lawmakers to agree on cuts to health and human services by March, in order to give agencies sufficient time to inform residents about the loss or reduction of state benefits (Small, "KPCC News," KPCC, 1/13). 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.