State Budget Proposal Would Cut Health Programs To Close Spending Gap, Finance Director Says

A new plan to close a projected $8.1 billion spending gap relies heavily on reducing the budgets of health care programs for elderly and low-income residents, Tom Campbell, the state's new director of finance, said Friday, the Los Angeles Times reports.

Campbell, who was appointed to the position Dec. 1, said he opposed raising taxes to close the gap because doing so "hurts businesses that can provide jobs." He added, "I will try to do nothing to discourage business." Instead, Campbell's budget plan would reduce spending for government health care and social service programs.

According to the Times, Campbell said that the state could make "lasting" budget cuts to such programs "without violating California's Constitution or federal spending mandates." He said, "There will be a serious review of what we can afford going forward. Health and human services is a large part of the focus."

Campbell suggested reductions might be made to the state's $13 billion Medi-Cal program, which has had a steady rise in costs "for years" primarily because of the rising cost of health care, the Times reports. The cost of Medi-Cal is expected to continue to increase and is a "major reason that state spending continues to spiral upward," according to the Times.

Campbell said a proposal for reducing the cost of the Medi-Cal program had not been finalized but potential savings would be reflected in the spending plan. Medi-Cal reform plans have been postponed twice since Gov. Arnold Schwarzenegger (R) took office.

According to the Times, Campbell "also made a familiar pledge: that the budget would contain no smoke and mirrors, no tricks or gimmicks to make it only appear balanced." However, Schwarzenegger and former Gov. Gray Davis (D), who both made similar promises, "had a tough time living up to" them, the Times reports (Halper, Los Angeles Times, 12/18).