Schwarzenegger Declares Fiscal Emergency, Unveils Deficit Fix
On Monday, Gov. Arnold Schwarzenegger (R) declared a fiscal emergency on the first day of a special legislative session to address California's estimated $6 billion budget shortfall for the current fiscal year, the Sacramento Bee reports (Yamamura, Sacramento Bee, 12/7).
Schwarzenegger also released a new proposal designed to reduce the state's deficit by about $9.9 billion over the next 18 months. The plan aims to decrease the current fiscal year's shortfall by $1.9 billion and reduce next fiscal year's estimated deficit by nearly $8 billion (Miller, Riverside Press-Enterprise, 12/6).
If California lawmakers fail to take action on the budget, the state deficit is expected to reach $25.4 billion by the end of the 2011-2012 fiscal year (Buchanan, San Francisco Chronicle, 12/7).
Health Care Cuts Included in Governor's Plan
Schwarzenegger's new budget plan calls for $7.4 billion in spending reductions, primarily targeting health and human services programs. The proposal also would generate $2.5 billion through funding changes and other revenue.
The governor's budget plan would cut funding from Healthy Families, California's Children's Health Insurance Program, by:
- Increasing monthly premiums to reduce spending by $31.2 million;
- Eliminating vision coverage to reduce spending by $13.6 million; and
- Raising copayments for emergency department visits to reduce spending by $6.8 million.
Schwarzenegger's proposal also would cut nearly $984 million in spending on Medi-Cal, California's Medicaid program, by:
- Capping payment on hearing aids and other medical equipment;
- Limiting prescriptions to six per month, except in certain cases;
- Restricting physician visits to 10 annually;
- Imposing new copayments for physician visits, ED visits and hospital stays;
- Eliminating Medi-Cal coverage for newly qualified immigrants; and
- Ending optional adult day health care benefits.
Schwarzenegger's plan also aims to reduce state spending by $1.4 billion by eliminating CalWORKS, California's welfare-to-work program, effective July 1, 2011 (AP/San Jose Mercury News, 12/6).
Legislators Unlikely To Act on Proposal
Schwarzenegger declared the fiscal emergency and released his new budget proposal on the same day that the newly elected class of legislators were sworn in.
Lawmakers are required to take action on budget proposals within 45 days of the declaration of a fiscal emergency.
However, many lawmakers are expected to hold off on budget negotiations until Gov-elect. Jerry Brown (D) takes office, which will be about two weeks before the end of the 45-day period.
Before Schwarzenegger publicly released his new budget plan, Assembly Speaker John PÃ©rez (D- Los Angeles) recessed the Assembly and told them to return on Jan. 3, the day that Brown will be sworn in as governor (Herdt, Ventura County Star, 12/6).
Senate President Pro Tempore Darrell Steinberg (D-Sacramento) also said he would prefer to work on a midyear budget correction with the new governor (Harmon, Contra Costa Times, 12/6).
Brown Gearing Up for Budget Work
A spokesperson for Brown declined to comment on Schwarzenegger's proposal (Woo, Wall Street Journal, 12/7).
Brown has invited state legislators and local government officials to attend a Wednesday meeting on the state's budget challenges (Goldmacher, Los Angeles Times, 12/7). State law requires Brown to present his own spending plan by Jan. 10 (Ventura County Star, 12/6).
For additional coverage on the health care implications of Schwarzenegger's budget plan, see today's Capitol Desk post.
"It's silly to think the Legislature will make any progress on the budget during a special session called by a lame-duck governor," a San Jose Mercury News editorial states. It continues, "But there is good reason for the next governor to work with PÃ©rez on the Assembly speaker's new bill to restore funding Schwarzenegger eliminated for the CalWORKS child care program for working families" (San Jose Mercury News, 12/7).
Headlines and links to broadcast coverage of the governor's budget proposal are provided below.
- "Arnold's Last Days: Schwarzenegger Budgets His Time as Governor" (Brand, "The Madeleine Brand Show," KPCC, 12/6).
- "New Lawmakers Sworn In, Already Thinking About Budget" (Lieszkovszky, "KXJZ News," Capitol Public Radio, 12/6).
- "Governor Calls Fiscal Emergency, Special Session" (Russ, "KXJZ News," Capitol Public Radio, 12/6).
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