This story was reported for the San Diego News Network on March 23, 2010.
As California lawmakers gear up for more budget cuts, they’ll have something else to deal with — the changes to Medi-Cal (known in other states as Medicaid).
Here’s your Tuesday edition of CBCD, linking federal demands to the the Golden State budget crisis.
Health care reform effects: California’s budget may take a harder hit with the passage of the federal health care reform bill.
According to Business Week, states, including the Golden one, are prepping to see more eligible Americans for the state-run program Medicaid.
“States faced with unprecedented declines in tax collections are cutting benefits and payments to hospitals and doctors in Medicaid, the health program for the poor paid jointly by state and U.S. governments. The costs to hire staff and plan for the average 25 percent increase in Medicaid rolls may swamp budgets, said Toby Douglas, who manages the Medicaid program for California, which hasn’t joined the lawsuits.
In California, the change could mean a couple billion dollars.
“‘For California, with a $20 billion budget deficit, the extra load will cost at least an additional $2 billion to $3 billion annually,” said Douglas, chief deputy director for California’s health care programs. He said the overhaul is currently projected to add 1.6 million people to the 7 million enrolled in his state’s program.
But it isn’t just California and a few other states that are unprepared for the change, said Douglas. He told Business Week, “I just don’t see states having the capacity to move forward on these changes in this environment.”
Tax breaks: California lawmakers on Monday sent Gov. Arnold Schwarzenegger two jobs-related bills that would extend a $10,000 homebuyer’s tax credit through the end of the year and give a tax break to the green-technology industry.
The Senate and Assembly passed the bills with bipartisan support in hopes of promoting housing construction and making California more inviting to businesses involved in developing alternative energy.
“Today, the Legislature approved two important job creation measures that put Californians back to work,” Assembly Speaker John Perez said in a statement after the votes were completed.
Passage of the legislation was intended to buy favor with Schwarzenegger in hopes that he would sign a budget bill that Democrats sent to him earlier in March. That bill involves a complicated swap of the state sales tax on gasoline for a gasoline excise tax that would send more money to the cash-starved general fund.
The governor signed that bill late Monday and indicated he would sign the two tax-break bills later.
Pitch for a Constitutional Convention: Talk of having a Constitutional Convention to revamp California’s laws is resurfacing… well, at least another man is making a pitch for it.
Writing for Fog City Journal, Ralph Stone asked readers to “Fasten your safety belts. It’s budget time again in Sacramento. Prepare for a repeat of last year’s contentious budget battle.”
Stone noted the controversial super-majority requirement for lawmakers to pass a fiscally-related bill. Many say the requirement is the cause of a severed budget process. But before making his pitch for the Convention, Stone described the intensity of California’s fiscal woes.
“California has the lowest credit rating of any state in the nation, just above junk bond status. One major problem is the rise in California’s debt-service ratio (DSR). That is, the ratio of annual general fund debt–service costs to annual general fund revenues and transfers. This is often used as one indicator of the state’s debt burden. The higher it is, the more rapidly it rises, the more closely bond raters, financial analysts, and investors tend to look at the state’s debt practices, and the more debt–service expenses limit the use of revenues for other programs. Debt servicing is projected to comprise 9 percent of general fund revenues by the end of 2014-15. According to Bloomberg News, the market believes a developing country like Kazakhstan, with about 15.7 million people, is less likely to default on its debt than California, which is the eighth largest economy in the world.”
But it isn’t just the massive fiscal problem facing California. Stone wrote that he doesn’t see any “serious calls for reforms.”
“Unfortunately, I see no serious calls for reforms in California’s fiscal management by the Governor, the legislature or even the candidates for governor. Where is the movement to change the inherent inequities in the Proposition 13 tax scheme, to change the two-thirds rule to pass a budget and to raise taxes, and to reform the initiative process? When the dust settles over the 2010-11 budget, nothing will be done to put California’s fiscal house in order and we will again face the same budget battle next year.
“It will take a Constitutional Convention to seriously address California’s dysfunctional fiscal problems because it won’t happen in the legislature or by the governor.”
Another student protest: Yup, there was another student protest. This time, students took it to California’s Capitol Monday. The issue is the same — students upset over tuition increases and budget cuts. The Sacramento Bee created a photo gallery of the protest worth checking out.
Associated Press contributed to this report. Hoa Quach is the political editor for the San Diego News Network.