Gov. Jerry Brown will give a first look at his priorities for the coming year when he releases his California budget proposal Thursday. It will include a proposed restructuring of a tax on health insurance plans to avoid a $1 billion budget gap.
California revenues are coming in more than $1 billion above projections in the current state budget – and that has some Democrats and advocacy groups once again clamoring for more: more funding for state universities, more money for road repairs, more money for the system that supports Californians living with developmental disabilities…just to name a few.
But the governor has warned of a looming billion-dollar budget hole if lawmakers don’t restructure a tax on health insurers that pays for the state’s Medi-Cal program. And he’s worried a new recession could wipe out the state’s budget reserve.
After struggling for much of the last year to find a way to restructure the managed health care organization (MCO) tax, the Brown administration appears to have reached a deal with health insurers that will be announced Thursday. But the tax will still need the support from two-thirds of lawmakers in each chamber, including some Republicans.
In recent years, Brown has released a January budget proposal that falls short of what Democrats want – paving the way for negotiations that tend to heat up in a few months. He's expected to do the same this year.
The question is how much Democrats will push back. Although the governor is not on the ballot this year, most state lawmakers are.