Officials Prepare for Possibility of Trigger Cuts Under State Budget

State lawmakers and interest groups are preparing for the possibility of automatic spending cuts under California's budget plan, the Wall Street Journal reports (Vara, Wall Street Journal, 12/12).

Background

In June, Gov. Jerry Brown (D) approved an $86 billion state budget plan that was based on spending cuts, fee hikes and expectations of higher revenue later in the fiscal year. Lawmakers also relied on an assumption that the state would receive $4 billion in new revenue over what previously was expected through June 2012.

Under the state budget package, additional spending cuts could be triggered for health care and education programs if revenue projections fall short by more than $1 billion.

Last month, LAO released budget projections showing that the state would be $3.7 billion short of budget expectations (California Healthline, 11/17).

The state Department of Finance is expected to release its financial outlook this week for the second half of the fiscal year (Harmon, San Jose Mercury News, 12/11).

Officials will decide whether to move forward with the triggered cuts based on the higher of the two estimates from the Legislative Analyst's Office and the finance department (Wall Street Journal, 12/12).

Details of the Cuts

Up to $2.5 billion in automatic cuts could be made under the budget.

The triggered cuts would be divided into two tiers, the first of which would go into effect in January if officials believe state revenue will be at least $1 billion short by June (Yamamura, Sacramento Bee, 12/12).

First-tier cuts would remove:

  • $100 million from the Department of Developmental Services (San Jose Mercury News, 12/11);
  • $100 million from In-Home Supportive Services -- a program for the elderly and people who are blind or have disabilities -- and 20% in service hours (California Healthline, 12/6);
  • $15 million from Medi-Cal, California's Medicaid program; and
  • $10 million from IHSS anti-fraud initiatives (San Jose Mercury News, 12/11).

The second tier of cuts could take effect if state revenue falls short of budget expectations by more than $2 billion. These cuts would affect public schools and community colleges (Sacramento Bee, 12/12).

Rally To Protest Possible Cuts

On Friday, KPCC's "KPCC News" reported on a rally in Los Angeles in which patient advocates, caregivers and students protested the possibility of triggered budget cuts (O'Neill, "KPCC News," KPCC, 12/9).

James Roache PharmD
The continued short sightedness of the Governor and Legislature as it relates to promoting business growth is evident again. Rather than continuing to cut, could not an action to stimulate business (and tax revenues) and reduce unemployment(save money) ever be considered? The mis-management of the budget mirrors the State's report card for job growth, efficiency of healthcare spending and some of the poorest edcational outcome ratings.

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