S&P Says Calif. Finances Are Better, but Future Is Uncertain
California is in a better financial position than in recent years, but long-term spending commitments could hinder efforts to pay down debt, according to a report by Standard & Poor's, the Sacramento Bee's "Capitol Alert" reports (Siders, "Capitol Alert," Sacramento Bee, 7/1).
Background on New State Budget Plan
Last week, Gov. Jerry Brown (D) signed into law a $96.3 billion fiscal year 2013-2014 state budget plan.
The budget includes a more conservative economic forecast -- part of an earlier budget proposal by Brown -- than spending plans developed by Democrats, which sought about $2 billion more in spending on state services and programs.
The new budget plan calls for:
- $206 million to improve mental health care services, including $142 million in one-time general fund money in the coming fiscal year;
- $51 million in non-general fund money in the coming fiscal year and about $150 million the following fiscal year to boost grants for CalWORKS, California's welfare-to-work program; and
- $16.9 million in general fund money in the coming fiscal year and $77 million the following fiscal year to help partially restore Denti-Cal benefits for adults.
Denti-Cal is the dental program of Medi-Cal, California's Medicaid program.
The plan also includes an additional $206 million to develop 25 mobile crisis support teams and provide 2,000 or more beds in local treatment centers for individuals with mental health problems.
Meanwhile, the budget includes an 8% cut to In-Home Supportive Services providers (California Healthline, 6/28).
Details of Report
According to the report, California "begins its fiscal year in a stronger position than it has in several years" with its "liquidity and structural budget positions both reflect[ing] materially better conditions."
In the report, S&P said that it "believes the higher-than-expected cash receipts presented the state [with] an opportunity to accelerate its plans for retiring the $26.9 billion in budget liabilities that remain leftover from prior years' deficits." In addition, S&P said, "Compared with what the governor recommended in May, however, the final budget agreement moves in the other direction, decelerating somewhat the repayment of a portion (of) these debts."
Meanwhile, S&P criticized "one of the weaker elements of California's financial institutions -- that of allowing political negotiation to influence the revenue estimates used in the budget."
S&P also said that it "detect[s] a softening of resolve when it comes to paying down the internal debts." It added, "We believe that by opening the door to new programs while waiting for future (uncertain) revenue to repay some internal debts, the state delays, or jeopardizes altogether, its ability to confront the long-term liabilities" ("Capitol Alert," Sacramento Bee, 7/1).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.