California Gov. Gavin Newsom and Democratic legislative leaders have largely reached agreement on a budget that makes significant new investments in access to health care and early childhood education.
In a statement issued late Sunday night, Newsom said the spending plan is “balanced, creates historic reserves and expands budget resiliency. It also invests in emergency preparedness and response, provides sustainable funding for safe drinking water, and includes important funding augmentations to address the cost crisis in our state.”
Under the deal, California’s low-income health care program, Medi-Cal, will begin next year offering coverage to young adult immigrants living in the state illegally.
A separate proposal that would have expanded coverage to undocumented seniors is not included in the final spending plan.
And the state’s Affordable Care Act exchange, Covered California, will start offering premium subsidies to middle class Californians who earn between 400 and 600 percent of the federal poverty level.
The agreement also expands Covered California subsidies for low-income Californians to “fully cover” the cost of the plan, according to the agenda for the joint Senate-Assembly budget conference committee.
The subsidies will be funded in part by a new state individual mandate that will require all Californias to purchase health insurance or pay a fine. It’s modeled after the Affordable Care Act’s nationwide individual mandate, which was rescinded two years ago as part of the federal tax overhaul passed by Congressional Republicans and President Trump.
The individual mandate and health insurance subsidies all take effect in 2020, after signups that begin this fall.
On early childhood education, the spending plan will begin funding Newsom’s push toward universal pre-kindergarten by increasing preschool slots for income-eligible four-year-olds. There’s also money for child care: new slots and higher provider rates for all ages, funded largely through cannabis tax revenues under voter-approved Proposition 64.
The terms of the agreement between Newsom, Senate President pro Tem Toni Atkins (D-San Diego) and Assembly Speaker Anthony Rendon (D-Lakewood) are being ratified by the legislative conference committee Sunday evening. The spending plan covers the new fiscal year that begins July 1.
“This state budget is not just ready on-time, it is one of the best budgets in state history – balanced, maintaining needed reserves, and expanding programs that are absolutely critical to the 40 million residents of California,” Rendon said in a statement.
Atkins said in her statement that the spending plan makes “significant investments in safe drinking water, historic levels of funding for California’s schools — including higher education — and financial assistance to California’s middle class families to pay for health care coverage.”
The agreement rejects a controversial Newsom proposal to create a new fee to clean up unhealthy drinking water in disadvantaged communities. Instead, it assigns money to the new safe drinking water fund with revenues from the state’s cap-and-trade program that seeks to reduce greenhouse gas emissions.
However, lawmakers will vote in the coming days on a new fee on cell phone bills to fund the modernization of the state’s outdated emergency response system.
There’s well over $2 billion in the final spending plan for housing and homelessness. That includes $500 million to construct roads, water and sewage at infill development sites where housing can’t yet be built, and $650 million for local governments in homelessness emergency aid.
A handful of significant issues remain unresolved — most prominently, Newsom’s push to conform California’s tax code to federal law, which changed under President Trump’s and Congressional Republicans’ 2017 overhaul. The governor wants to use the extra state revenue to expand the state’s earned income tax credit for low-income, working Californians. Negotiations will continue in the coming weeks.
The Senate and Assembly could begin voting on the spending plan — including the budget bill and the first batch of related measures that implement it, known as “trailer bills” — as soon as Friday. The Legislature’s constitutional budget deadline is Saturday. Because the trailer bills do not face the same June 15 deadline, they can be voted on later this month.