Legislature Fails To Pass Budget by Deadline; Medi-Cal Provider Payments in Jeopardy

The Legislature has failed to pass a state budget before the July 1 deadline imposed by the state Constitution for the third consecutive year, possibly jeopardizing some Medi-Cal payments, the AP/Contra Costa Times reports. The state faces a $38.2 billion budget deficit and is currently operating entirely on borrowed money (Chorneau, AP/Contra Costa Times, 7/1). State officials last month sent letters to nursing homes and clinics statewide warning that the state might not make Medi-Cal payments to certain providers if the Legislature does not approve a budget before today (California Healthline, 6/26). According to Controller Steve Westly, California has enough funds to continue payments through mid-August. In addition, state officials said the state cannot borrow any more money until a new budget is passed (AP/Contra Costa Times, 7/1). According to the San Francisco Chronicle, some nursing homes and medical clinics already have gone without Medi-Cal payments for the past 10 days because the state had depleted Medi-Cal funding by the end the fiscal year, which ended yesterday (Martin/Berthelsen, San Francisco Chronicle, 7/1).

Gov. Gray Davis (D) and other Democratic state legislators want to increase the state sales tax to offset the state's deficit but need several Republican votes to get that proposal approved, the Washington Post reports. State GOP lawmakers are opposed to tax increases (Russakoff/Sanchez, Washington Post, 7/1). Meanwhile, Senate Republicans yesterday proposed two dozen budget amendments, including a $1.2 billion reduction in expenditures by eliminating two cost-of-living adjustments in grants to elderly, blind and disabled residents, to reduce state expenditures (Hill, Sacramento Bee, 7/1). Still, Assembly and Senate leaders said that the two sides do not appear to be nearing a budget compromise (Rabin/Halper, Los Angeles Times, 7/1). The Republican senators' amendments are scheduled to be debated tomorrow or Thursday, the Bee reports (Sacramento Bee, 7/1). Many health providers are concerned that Medi-Cal payments will run out before the state passes a budget, potentially forcing some providers to shut down (Schevitz/DeFao, San Francisco Chronicle, 7/1). Davis said, "We still have an opportunity to find common ground. Failure to do so would be irresponsible and dangerous. Critical funding for hospitals [and] nursing homes ... is at stake" (AP/Contra Costa Times, 7/1).

The following are summaries of editorial reactions to the state's budget situation.

• Russell Korobkin, Los Angeles Times: Democratic lawmakers must abandon their position of not accepting any further spending cuts to offset the budget deficit, because reducing health care "is better than cutting [it] off altogether," Korobkin, professor of law at the University of California-Los Angeles, writes in a Times opinion piece. According to Korobkin, Democrats and Republicans are playing a "game of chicken" in which Democrats favor raising taxes to bridge the budget gap and Republicans favor deeper spending cuts. With a majority in both houses and a Democratic governor, Democrats have the opportunity to relent on their position and still pass a budget on their own, as long as they do not raise taxes -- which in both houses requires a two-thirds majority, Korobkin writes. He concludes, "Democrats will swerve ... unless they are willing to sacrifice the well-being of Californians rather than lose face" (Korobkin, Los Angeles Times, 7/1).
  
  
• San Francisco Chronicle: The "most immediate problem" in the budget negotiations is "political gridlock" between Democrats and Republicans, the Chronicle states, adding, "This year, the missing budget can't be finessed. Children with autism and adults with Alzheimer's stand to lose nursing care within weeks" (San Francisco Chronicle, 7/1).