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The Latest Budget News

Get up-to-date information on the status of state budget proposals and revenue solutions.

Last Updated 5/15/2012

Governor’s May Revise Continues to Harm Low-Income Communities of Color

On May 14th, Governor Jerry Brown released his revised budget proposal, aimed at closing the state’s deficit, now estimated at close to $16 billion. The new proposal includes $8.3 billion in reductions to safety-net programs, including deeper cuts to Medi-Cal, In-Home-Supportive Services (IHSS), hospitals, and nursing homes. The proposal also assumes $5.9 billion in additional revenues, dependent on passage of a ballot initiative in the fall.

The Governor’s November ballot initiative is a long-term solution to help stabilize California’s ongoing budget deficit. The measure would temporarily raise taxes on those with the highest incomes and increase the sales tax by a quarter of a cent. If the measure fails, the result would be an additional $6.1 billion in spending cuts, mostly to K-12, higher education, and public services. However, health and human services programs will continue to be impacted regardless of the outcome in November. You can access the budget directly on the Department of Finance’s website.

Highlights of the 2012-13 Revised General Fund Spending Plan Include:

Medi-Cal:
The Governor’s May Revise:

• Institutes co-pays for Medi-Cal beneficiaries at $15 for non-emergency room visits and $1 and $3 for pharmacy services (a proposal previously rejected by CMS).
• Modifies an earlier proposal to transfer 1.2 million seniors and people with disabilities who qualify for both Medi-Cal and Medicare — also known as “dual eligibles” — from fee-for-service Medi-Cal into Medi-Cal managed care by delaying the implementation date from January 1, 2013 to March 1, 2013, reducing the number of piloted counties from 10 to 8, and specifying that IHSS recipients would continue to “select and direct” their home care provider.
• Reduces supplemental payments to private hospitals, eliminates public hospital grants, and ends increases to managed care plans for supplemental payments to “designated” public hospitals for a savings of $150 million.
• Rescinds an earlier agreement to provide $100 million to public hospitals for uncompensated care under the federal Medicaid waiver.
• Includes an additional cut to district hospitals (non-designated public hospitals) of $75 million.
• Makes changes to nursing home reimbursements for a total of $70.9 million in savings. 
• Relies on $40 million in funding from the First 5 California Children and Families Commission to fund health services for children from birth through age 5.

Medi-Cal cuts proposed in January:

• Shifts care for California’s 1.2 million seniors and people with disabilities who qualify for both Medi-Cal and Medicare from fee-for-service Medi-Cal into Medi-Cal managed care (see above for details).
• Defers payment (one-time) in 2012-13 for all providers, and aligns payment policies for all managed care counties.
• Expands managed care to rural counties that are now fee-for-service only, beginning in 2012.
• Transforms payment methodology for federally qualified health centers (FQHCs) and rural health clinics (RHCs) funded under Medi-Cal from a cost and volume-based payment to a fixed performance, risk-based payment model.
• Eliminates the sunset date of the Gross Premiums Tax on Medi-Cal managed care plans.
• Extends the fee on hospitals.

Healthy Families:
The Governor’s May Revise restores $42.4 million in funds to Healthy Families, as a result of the federal government's denial of an earlier proposal to increase premiums and co-payments for Healthy families recipients.

Healthy Families cuts proposed in January:

• Transfers Healthy Families recipients to Medi-Cal over a 9-month period from October 2012 to June 2013.
• Eliminates the Managed Risk Medical Insurance Board (MRMIB), effective July 1, 2013.
• Reduces payment rates for Healthy Families managed care plans to Medi-Cal rates, effective October 2012.
• Transfers Access for Infants and Mothers (AIM) and other MRMIB programs to Department of Health Care Services (DHCS) by July 1, 2013.
• Eliminates the Pre-Existing Conditions Insurance Plan (PCIP) and the Major Risk Medical Insurance Program (MRMIP) in 2014 under the assumption that most individuals will be able to get health coverage in the Exchange.

Other cuts that will impact our communities:

The May Revise proposal includes a 7 percent across-the-board cut in IHSS worker hours, effective August 1, 2012. The plan continues cuts to CalWORKs by $879.9 million, slightly less than the $946.2 million reduction proposed in January and includes an earlier proposal that eliminates “domestic and related services” — which include housework, shopping, and meal preparation — for approximately 254,000 IHSS recipients.

Last Updated 4/9/2012

Proposition 29 Will Prevent Smoking and Fund Cancer Research

California voters will have an opportunity to vote on Proposition 29 on the June 5th ballot. The measure imposes an additional $1.00 tax on cigarette packs, generating approximately $735 million a year to support cancer research and tobacco use prevention and smoking cessation programs. Prop. 29 will improve the health of communities of color, who represent over half (51.5%) of the state’s approximately 3.9 million smokers. Vote YES on Prop 29.

State Budget Update

Lawmakers heard testimony in February and March from recipients of key programs slated for cuts, including Medi-Cal and Healthy Families, In-Home Supportive Services (IHSS), childcare services, and CalWORKs. The Assembly Budget Subcommittee rejected the Governor’s proposal to cut CalWORKs by over $1 billion. While the Senate did not outright reject the CalWORKs cuts, both the Assembly and Senate have voted to delay most decisions on further reductions until after Governor Brown releases his May Revise proposal. For up-to-date information on budget herings, go to sbud.senate.ca.gov/subcommittee3.