On Monday, Gov. Jerry Brown (D) released his revised fiscal year 2012-2013 budget plan, which includes deeper cuts to health and welfare programs than his initial proposal, the Sacramento Bee's "Capitol Alert" reports (Yamamura, "Capitol Alert," Sacramento Bee, 5/14).
A Growing Deficit
On Saturday, Brown announced that California's budget deficit has grown to $16 billion, nearly twice as high as the $9.2 billion shortfall he estimated in January when he released his initial budget plan.
Brown said that the higher deficit estimate is the result of a slow economic recovery and decisions by the federal government to block proposed state spending cuts.
He said that the state will "have to go much further, and make cuts far greater than I asked for at the beginning of the year" (California Healthline, 5/14).
Details of Initial Budget Plan
Brown’s initial $92.6 billion budget plan, released in January, called for cutting:
- $946.2 million from CalWORKs -- the state's welfare-to-work program -- by limiting the amount of time most adults could be on the program from four years to two years;
- $842.3 million from Medi-Cal -- California's Medicaid program -- by merging services for beneficiaries eligible for both Medi-Cal and Medicare;
- $163.8 million from In-Home Supportive Services -- which provides services for the elderly and people who are blind or have disabilities -- by eliminating domestic assistance for beneficiaries in shared living environments; and
- $64 million from Healthy Families, California's Children's Health Insurance Program, by moving children out of the program (California Healthline, 4/16).
Details of Revised Budget Plan
Brown's $91.4 billion revised budget plan relies on most of the cuts he proposed in January ("Capitol Alert," Sacramento Bee, 5/14).
However, the revised budget plan calls for cutting:
- An additional $400 million from Medi-Cal -- for a total of $1.2 billion in cuts -- including payment reductions to hospitals and nursing homes (Riccardi, "PolitiCal," Los Angeles Times, 5/14); and
- IHSS worker payments by 7%, totaling $225 million in cuts to the program (O'Neill, "KPCC News," KPCC, 5/14).
The revised budget plan would maintain the $1.3 billion in reductions to welfare and child care that Brown initially proposed.
In addition, the revised budget plan calls for transitioning to a four-day, 38-hour workweek for "the majority of state employees," including those who work at state hospitals (Ortiz, "The State Worker," Sacramento Bee, 5/14).
The revised budget plan relies on revenue from a compromise tax hike initiative that Brown is trying to qualify for the November ballot. The budget plan assumes $8.5 billion in new revenue from the tax hike (Christie, Reuters/CNBC, 5/14). He developed the compromise tax plan with supporters of the "Millionaires Tax" (California Healthline, 5/14).
Brown Promotes Compromise Tax Plan
During a press conference on Monday, Brown said, "I'm linking these serious budget reductions ... with a plea to the voters: Please increase taxes temporarily" (Megerian/York, Los Angeles Times, 5/15).
The tax hike plan would:
- Increase the personal income tax by one percentage point for individuals who earn $250,000 annually or couples who earn $500,000 annually and by two percentage points for individuals who earn $300,000 annually or couples who earn $600,000 annually;
- Extend the income tax increases on wealthy residents from five to seven years; and
- Increase the sales tax by a quarter of a cent.
The sales tax hike would expire in four years.
The proposal would raise an estimated $9 billion over the next fiscal year.
Last week, Brown began submitting voter signatures to qualify the plan for the November ballot (California Healthline, 5/14).
Democrats' Response to Revised Budget Plan
Senate President Pro Tempore Darrell Steinberg (D-Sacramento) said Democratic lawmakers would propose smaller cuts to social service programs, such as home health care and welfare.
He said, "There is a balance between making necessary cuts, which we will do, and maintaining and preserving essential services for people, especially people most in need" (Los Angeles Times, 5/15).
Steinberg said one strategy for sparing social service programs would be to access the state's proposed reserve fund for next year, known as the state's rainy-day fund.
Steinberg and Sen. Mark Leno (D-San Francisco) -- chair of the Budget and Fiscal Review Committee -- agreed that tax increases proposed by Brown are necessary to curb the deficit.
Leno said, "We will not have the resources we need to put California back on its feet with the revenues that the governor is proposing in his November ballot initiative" (McGreevy, "PolitiCal," Los Angeles Times, 5/14).
GOP Response to Brown's Comments on Taxes
Assembly members Connie Conway (R-Tulare) and Jim Nielsen (R-Gerber) criticized Brown for promoting the tax plan. They said in a statement, "We believe this updated [budget] proposal is part of the governor's strategy to try and fool Californians into accepting a costly tax increase as a necessary step."
Patient Advocates Respond to Revised Budget
Certain patient advocates criticized the cuts in Brown's revised budget plan. Deborah Doctor, a lobbyist with Disability Rights California, said, "It's the same people year after year who are the victims of the budget ax" (Los Angeles Times, 5/15).
Vanessa Aramayo, executive director for the California Partnership, said, "The problem is we don't know how to spend our money," adding, "We've cut substantially over the years," but "we're not generating enough revenue" ("KPCC News," KPCC, 5/14).
The release of Brown's revised budget plan marks the start of a month of budget debate in the Legislature, according to the Times. Lawmakers must approve a budget plan by June 15 so that it can take effect by July 1, the start of the new fiscal year (Los Angeles Times, 5/15).