Low Revenue Triggers $980M in Deeper State Spending Reductions

On Tuesday, Gov. Jerry Brown (D) announced an additional $980 million in state budget cuts that will affect health and human services programs, the Sacramento Bee reports (Yamamura/Lambert, Sacramento Bee, 12/14).

Background

In June, Brown 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.

The budget called for additional spending cuts that would be triggered if revenue projections fell short by more than $1 billion.

Revenue Projections

Last month, the Legislative Analyst's Office released budget projections showing that the state would be $3.7 billion short of budget expectations (California Healthline, 12/12).

On Tuesday, the Department of Finance estimated that revenues this fiscal year would be $2.2 billion short of budget projections. Officials used the Department of Finance forecast move forward with the automatic cuts.

Details of the Triggered Cuts

Most of the triggered cuts will take effect Jan. 1, 2012 (Weintraub, HealthyCal, 12/13).

The state aims to save:

  • $101.5 million by reducing hours by 20% and eliminating local anti-fraud funding for the In-Home Supportive Services program, which provides services for the elderly and people who are blind or have disabilities (Yamamura, "Capitol Alert," Sacramento Bee, 12/13);
  • $100 million through cuts to the state Department of Developmental Services, which provides services for individuals with mental health issues (Herdt, Ventura County Star, 12/13); and
  • $8.6 million by extending Medi-Cal cuts and copayments to managed care plans.

Medi-Cal is California's Medicaid program.

The reductions also include a $20 million cut to the Department of Corrections and Rehabilitation, as well as cuts to state universities, community colleges and other school programs ("Capitol Alert," Sacramento Bee, 12/13).

Meanwhile, Brown is planning to release his proposed budget for the next fiscal year. He said his proposal will include "far more than $1 billion" in additional cuts unless voters approve his plan to temporarily increase income and sales taxes. Brown added, "And they'll be the same kind of state services, very important to help the poor, elderly, our university students" (Lin, AP/San Francisco Chronicle, 12/13).

LAO has estimated that the state will face a $12.8 billion deficit next fiscal year (Sacramento Bee, 12/14).

Challenge to IHSS Cuts

A court recently issued a temporary restraining order to stop the state from sending out notices of possible cuts to IHSS (Buchanan/Lagos, San Francisco Chronicle, 12/14). The decision was in response to a lawsuit filed by Disability Rights California and other groups.

The order did not stop the cuts, but it prevented the state from sending out notices to about 370,000 people who would be affected by the cuts.

A court hearing on the issue is scheduled for tomorrow (California Healthline, 12/5).

Broadcast Coverage

On Tuesday, Capital Public Radio's "KXJZ News" reported on the trigger cuts (Adler, "KXJZ News," Capital Public Radio, 12/13).

For additional coverage on how the cuts affect IHSS and services for residents with developmental disabilities, see today's Capitol Desk post.


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