Legislative Analyst Criticizes Some Provisions Included in Schwarzenegger’s Revised FY 2004-2005 State Budget Proposal
In a review of Gov. Arnold Schwarzenegger's (R) revised fiscal year 2004-2005 state budget proposal released Monday, Legislative Analyst Elizabeth Hill said that the proposal, which included the withdrawal of some funding cuts to health and welfare programs, was insufficient to address the state's long-term budget deficit, the Sacramento Bee reports (Bluth, Sacramento Bee, 5/18). Hill estimates that the revised budget plan probably could balance the budget for another year using the proceeds of additional bond sales, but she added that the state likely would face an $8 billion budget deficit in FY 2006-2007. Hill said that Schwarzenegger's decision to withdraw his proposal for almost $1 billion in health care cuts, specifically a 15% decrease in reimbursement rates for Medi-Cal providers, was one of the main reasons that increased future budget gaps, the San Diego Union-Tribune reports (Mendel, San Diego Union-Tribune, 5/18). The 15% cut to Medi-Cal rates included in the governor's original $99.1 billion budget proposal would have reduced state spending by about $462 million (California Healthline, 5/14). To save money this year, the revised plan proposed delaying until July $143 million in payments to Medi-Cal providers so that the payments will be counted in the next fiscal year (Quach, Orange County Register, 5/18). Hill recommended that the Legislature consider larger spending cuts, tax increases or other more permanent solutions to address the budget deficit, the San Jose Mercury News reports (Marimow, San Jose Mercury News, 5/18). Hill said, "We've lost a number of ongoing solutions from the January plan, plus we have pushed out some obligations to future years." She added, "In our view, the May revision misses an opportunity to make further progress on addressing the state's long-term structural imbalance."
Department of Finance spokesperson H.D. Palmer said that the governor's budget writers were conservative in their spending plan and omitted savings from the recent worker's compensation overhaul and a pending proposal to reform Medi-Cal (Sacramento Bee, 5/18). He also said that Hill's prediction that the state will face significant budget deficits again in as soon as three years does not take into account additional steps that Schwarzenegger can take to address the issue, including plans to increase efficiency in state government, the Los Angeles Times reports (Halper, Los Angeles Times, 5/18). According to the Union-Tribune, Democratic legislators who reacted to Hill's report "seemed to suggest that they are not preparing for battle" with Schwarzenegger over his revised budget proposal. Senate President Pro Tempore John Burton (D-San Francisco) said, "There is no sense fighting for something that you can't necessarily win, if the governor says he is against [a tax increase]" (San Diego Union-Tribune, 5/18). The legislative analyst's report is available online.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.