Panel Rejects Schwarzenegger's Proposal To Cut Healthy Families

Yesterday, the California Legislature's joint budget conference committee rejected Gov. Arnold Schwarzenegger's (R) proposal to eliminate Healthy Families as part of an effort to close the state's $24.3 billion deficit, the Los Angeles Times reports. Healthy Families is California's Children's Health Insurance Program (Goldmacher, Los Angeles Times, 6/16).

Instead, the committee voted to approve $70 million in cuts to the program's budget, hoping that donations from philanthropic groups or other organizations would cover the drop in state funding.

A committee staff report indicated that the cut would lead to a waiting list for new children seeking coverage through the program (Buchanan, San Francisco Chronicle, 6/16).

Other Cuts

The joint legislative panel also rejected several of Schwarzenegger's other budget provisions and instead offered their own proposals.  The differences include:

  • Adult Day Health Care: Schwarzenegger's budget aimed to eliminate the program, which the administration estimated would reduce state spending by $170.5 million. The panel instead opted to cut only $26.8 million from the program (Los Angeles Times, 6/16).
  • HIV/AIDS programs: The governor also proposed trimming HIV/AIDS education, prevention and treatment programs by $80.1 million, but the panel reduced the cut to about $33.5 million.
  • Local Governments: Legislators from both parties rejected the governor's plan to borrow nearly $2 billion from cities and counties. Last week, Schwarzenegger said he would abandon the proposal if legislators made up the difference by cutting health care for state workers or other programs (Wiegand/Sanders, Sacramento Bee, 6/15).

What Comes Next

Joint committee members from both houses say they hope to develop a complete budget proposal to send to the full Legislature within a week (Los Angeles Times, 6/16).

Yesterday, legislators missed the constitutional deadline to approve a balanced budget by June 15. Controller John Chiang (D) said that every passing day without a budget plan poses increasing challenges for the state to borrow money in order to resolve a cash shortage by the end of the month.

Assembly Democrats Call for New Revenue

On Monday, Assembly Democrats unveiled their own budget proposal, which attempts to close the budget gap through several revenue-raising measures, such as:

  • Cigarette taxes;
  • Oil extraction taxes;
  • Rescinding corporate tax breaks; and
  • Taxing Internet and mail-order sales (Sacramento Bee, 6/16).

Assembly Speaker Karen Bass (D-Los Angeles) said the legislative panel also would adopt the governor's revenue-raising measures, which include new fees, shifted funds and accelerated tax collection (York, Capitol Weekly, 6/15).

Although lawmakers might enact extensive cuts to several programs, Bass said she anticipates a "balanced approach" that would "not eliminate basic safety net programs" (Los Angeles Times, 6/16).

Bass said that she hopes Republicans will support the Assembly Democrats' budget plan, but added that Republican votes might not be necessary to pass the proposal.

Tax increases require a two-thirds vote in the legislature, while fees can be passed with a simple majority vote (Lin, AP/Riverside Press-Enterprise, 6/15).

The Legislature's joint budget committee is expected to discuss the Assembly plan this afternoon.

Senate Democrats Prepared To Compromise

Although Bass and Senate President Pro Tempore Darrell Steinberg (D-Sacramento) both oppose extensive cuts to California's health and social programs, the two legislative leaders disagree somewhat on how to mend the budget gap.

Last week, Steinberg proposed dipping into the state's $4.5 billion reserve fund to fill the deficit, while Bass favors raising taxes or imposing new ones. Although Steinberg said he would not lead with a revenue-raising plan, he also said he would not rule one out.

Steinberg said, "What is more important, maintaining health care for 900,000 kids or keeping a recently passed corporate tax break?"

The Senate leader also appeared ready to work with Assembly members to oppose elements of Schwarzenegger's budget plan. He said, "What we're saying loud and clear, (Democrats in both houses), is that for the remainder, we have to find another way" (Sacramento Bee, 6/15).

Republicans Stand Their Ground

Aaron McLear, Schwarzenegger's spokesperson, said the Democrats' proposals do not include sufficient program cuts and are therefore "nowhere near solving the $24 billion deficit that the state faces."

Schwarzenegger and Republican lawmakers also say they will oppose any efforts to impose new levies or cancel corporate tax benefits (Los Angeles Times, 6/16).

Assembly GOP leader Sam Blakeslee (San Luis Obispo) said, "I don't think raising taxes is going to help us get out of this problem" (Sacramento Bee, 6/16).

KQED Interview

In an interview set to air today on KQED's "The California Report," the governor discussed efforts to address the state budget deficit, including options to maintain funding for Healthy Families (Myers, "Capital Notes," KQED, 6/15).

Help From Washington

Although some California lawmakers assert that the state is "too big to fail," the administration of President Obama has declined to provide emergency aid to the state, the Washington Post reports. 

After a series of meetings, senior administration officials concluded that California should address its budget deficit rather than rely on federal assistance (Cho et al., Washington Post, 6/16).

Opinion Piece

Gov. Schwarzenegger's plan to eliminate funding for California family planning programs such as Family PACT is "more than penny-wise, pound-foolish. It puts women's lives at risk," Yali Bair, interim CEO of Planned Parenthood Affiliates of California, writes in a San Francisco Chronicle opinion piece.

Bair continues that although "California's dire budget situation requires painful choices," family planning programs "are government at its best -- offering public health benefits and cost savings" (Bair, San Francisco Chronicle, 6/16).


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