Next Recession
The governor, presenting his 16th and final state budget of his four terms in office, offered his customary warning that California’s finances are volatile and will plummet once the next recession hits.
“It’s so important we prepare for the recession not when it comes but years before,” Brown told reporters at a press conference at the state Capitol.
“California has faced ten recessions since World War II and we must prepare for the eleventh. Yes, we have had some very good years and program spending has increased steadily,” the governor added in a press release. “Let’s not blow it now.”
Higher education
On higher education, Brown proposed what he described as “the first wholly online community college,” as a new, affordable pathway for students.
Overall, his budget proposes a $570 million increase, or 4 percent, for community colleges. The University of California and California State University systems would each see a 3 percent budget hike.
Budget surplus
Prior to the release of Brown’s budget, the state’s non-partisan Legislative Analyst’s Office projected a nearly $20 billion reserve if the state doesn’t increase spending in the coming fiscal year — and the economy stays on track.
H.D. Palmer, a spokesman for the Brown Department of Finance said Brown will once again seek to limit permanent spending increases “so his successor, whoever that individual may be, doesn’t have to deal with the kind of budget calamity that he had to face when he took office back in 2011.”
Palmer said the new federal tax law is just one of many uncertainties driving the governor’s cautious approach to the state budget.
Last month, Assembly Democrats laid out their budget vision for the coming year. In addition to building reserves, they plan to seek increases for the state’s tax credit for low-income, working people; and expand Medi-Cal to cover immigrants living in California illegally.
Budget Increases Funding For Women and Children’s Health
Sammy Caiola, Capital Public Radio Health Reporter
Planned Parenthood Affiliates of California applauded Gov. Jerry Brown Wednesday for making room in the budget for women and families.
The plan includes targeted funding for social programs that primarily benefit low-income women and children, such as expanding child care slots and child care provider rates through CalWORKS. It also continues to implement Proposition 56 — the 2016 tobacco tax — which benefits child development programs, family planning access and breast cancer research.
Crystal Strait, President and CEO of the group, said in a statement that the budget will help the organization provide care to nearly 800,000 patients.
“It seems to be a little bit of a doom and gloom from the federal level, and yet here in California today we see the governor yet again invest in women and invest in health care. When we need to take the positives when we get them and reflect on this moment.”
The new budget also provides $27 million in pilot funding for a new home visiting initiative that will continue through 2021. The program will help first-time, low-income parents in the CalWORKS program by sending home visitors to help them with family mediation, healthy child development and connecting to resources.
Medi-Cal Gets Lion’s Share of Governor’s Health Money
Sammy Caiola, Capital Public Radio Health Reporter
The brunt of new Department of Health and Human Services funding - 65 percent - will go toward bolstering Medi-Cal offerings for low-income residents. The Medi-Cal program will receive about $101 billion of the $155 billion allotted for entire department.
Nearly 13.5 million Californians get insurance through the program - up 6,000 people since the last budget year. The new budget emphasized the importance of funding Medi-Cal in the face of recent federal threats to repeal the Affordable Care Act (Read more about those efforts here and here).
The Children’s Health Insurance Program — a federal fund that bolsters care for about two million California children — is also on uncertain ground. The budget notes that if the federal government doesn’t renew funding for the program in March 2018, state costs to cover those children will increase by “hundreds of millions” in 2018 to 2019.
Throughout 2018, the increased Medi-Cal funding will help restore health services that were cut during the recession, including dental care for all enrollees and feeding tubes for enrollees who are too sick to eat normally.
Additionally, the budget allocates nearly $650 million for supplemental Medi-Cal payments and rate increases that were approved in the 2017 budget package. Some of these funds go directly to reimbursing physicians and dentists for specific services, with the goal of increasing provider participation in Medi-Cal.
Also in the budget – a move to restrict use of the federal 340B Drug Pricing Program, which lets safety net providers pay lower prices on outpatient drugs for disadvantaged patients.
“Community health centers and the patients they serve rely heavily on this vital program,” said Carmela Castellano-Garcia, president of CaliforniaHealth+ Advocates. “Eliminating the 340B program would be detrimental.”
Only two percent of the budget will go to the California Department of Public Health and 1.2 percent will go to the Department of State Hospitals. The rest of the funds are distributed between in-home supportive services, developmental services, Supplemental Security Income and CalWORKS programs.
New Budget Boosts In-home Services And Mental Health, Shifts Developmental Disability Care
Sammy Caiola, Capital Public Radio Health Reporter
Funding continues to grow for the In-Home Supportive Services program and mental health programs, while state-provided disability care is disappearing
The state’s In-Home Supportive Services program offers housework, transportation, and personal care services to about 545,000 elderly, blind, and disabled persons meeting low-income criteria. The caseload for this program has increased 26 percent since 2010-2011, as more people have chosen to age at home.
The budget calls for about an eight percent increase in general fund contributions to in-home services, though participation has only jumped 5.4 percent since the last budget. Changes will include more sick leave hours for IHSS providers and a shift in how many cases each worker can take on.
New funds are allocated for mental health programs benefiting people accused of crimes who are deemed incompetent to stand trial. There will also be new mental health beds and treatment options for inmates.
At the same time, care for the state’s developmentally disabled residents is increasingly shifting to regional centers. The new budget includes the planned closing of three developmental centers that help participants live and work in supportive environments.
The budget estimates that only 547 residents will be served in the state centers by July 2018, while 330,000 will be receiving local services. About $7.3 billion in new budget funds will support developmental services.
Budget Focuses On Climate Change, Fire, Clean Water For Disadvantaged Communities
Ezra David Romero, Capital Public Radio Environment Reporter
Gov. Jerry Brown’s 2018 budget continues efforts to combat climate change. A total of $9.8 billion is destined for the Natural Resources Agency for things like groundwater sustainability, flood management and additional funding for expanding the state’s firefighting capabilities.
“The extreme natural events of 2017 and the cascading impacts to people, our utility infrastructure and our natural environment underscore the necessity to prepare for and mitigate the effects of climate change,” according to the budget.
The budget outlines four “groundbreaking climate resiliency documents” that’ll be released this year to help plan for and understand climate change. The documents will explore sea level rise, how to protect the state’s forests and how to better base actions taken by state agencies and local government in scientific understanding.
Brown says, with climate change “ushering in extreme weather” and an almost year-round fire season the new budget provides significant adjustments for fighting fires – the total budget includes $2.3 billion and funds 7,104.5 CALFIRE jobs.
The budget includes $97.6 million for four state-of-the-art helicopters to replace aging CAL FIRE Vietnam War era choppers, and $4 million for staffing purposes at the McClellan Reload Base north of Sacramento for the rapid deployment of air tankers.
It also provides $26.6 million to train 80 ex-offenders at the Ventura Conservation Camp with skills to “qualify for entry-level firefighting positions.”
The budget also includes funds for increasing efforts to recover endangered species, restoring the Salton Sea, and funds to explore new ways to sustain marine fisheries.
Lastly, the budget establishes the Safe and Affordable Drinking Water Fund. The State Water Board will use the funds to help disadvantaged communities pay for the short-term and long-term costs of getting access to clean water.
The administration is working to create a program that provides grants, loans or contracts to communities in need of clean drinking water. The budget also funds $63 million for projects that help disadvantaged communities access safe and affordable drinking water.
In other news, today the governor appointed Karla Nemeth as the new director of the California Department of Water Resources. Since 2014, Nemeth served as Governor Brown’s deputy secretary and senior advisor for water policy at the California Natural Resources Agency. Before that she was the Bay Delta Conservation Plan project manager.
The Times, They Are A Changin': Or, Remember When California Faced A $27 Billion Deficit?
Ben Adler, Capitol Bureau Chief
Gov. Jerry Brown took every opportunity during his California budget news conference Wednesday to stress how far the state's financial health has improved from when he first returned to the Capitol in 2011.
"We cut spending, the economy recovered, and voters approved tax increases," Brown wrote in his annual budget letter to the Legislature. "The $27 billion deficit became a solid surplus."
To refresh your memory of the budget crisis that the governor inherited that year from former Gov. Arnold Schwarzenegger, take a listen to the first 90 seconds of Brown's press conference on January 10, 2011:
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And here's how Capital Public Radio's Marianne Russ and Ida Lieszkovszky covered that 2011 budget proposal.
Today, Brown acknowledged that he has been lucky to benefit from two strong tailwinds.
One was California's economy, which has been on a nonstop boom during his entire current stint in the governor's office.
"We have a whole political system that judges our executives by the state of the economy over which they have virtually no impact," he said.
The other is Proposition 25, the ballot measure voters approved in 2010 that lowered the legislative threshold to pass a state budget from a two-thirds supermajority to a simple majority.
"That made it easy," Brown said of Prop.25.
As for whoever succeeds him as governor next January, Brown noted that he or she will take office just as California's economic recovery reaches its longest ever in the post-World War II era.
His advice?
"Good luck, baby!"
Lawmakers React To Budget Proposal
Ben Bradford, Capital Public Radio State Government Reporter
Gov. Jerry Brown’s proposed budget drew the usual reaction from Republican and Democratic lawmakers—a mix of praise and criticism that crosses party lines.
The big question this year is once again what to do with the state’s projected surplus.
“The governor has proposed fully funding the Budget Stabilization Account, what we call the Rainy Day Fund—certainly a great start,” says Assembly Budget Committee Vice-Chair Jay Obernolte, with this caveat: “The reason we have such a budget surplus is that Californians are overtaxed."
Democrats in the Legislature also support raising the state reserve, but unlike Republicans, they’re floating increased, ongoing funding to a variety of social programs.
“Those include but are not limited to how we move closer to universal health care, how we look at expanding California’s Earned Income Tax Credit, so working families can get a tax break … and, really looking at ways we can expand early education universally.” says Assembly Budget Committee Chair Phil Ting, a Democrat from San Francisco.
Senate Budget Chair Holly Mitchell says Brown’s proposal doesn’t do enough for low-income Californians.
"From my perspective that’s the beginning of this dance, the state budget negotiation dance, if you will,” Mitchell says. “Where the Legislature will weigh in on where we think it’s most important to invest in California, and invest in programs that Californians rely on to survive.”
Lawmakers will begin meeting to craft their counterproposals next week.
Brown Proposes New, Online Community College, But Slower University Spending Increases
Ben Bradford, Capitol Public Radio State Government Reporter
The California Community College system would launch its own, online school next year, under Gov. Jerry Brown’s budget plan.
“It’s targeted at people in the workforce, and they need to upgrade their skills and improve their lives,” Brown said.
The proposal calls for setting aside $100 million of state education funds to start the school, with another $20 million in ongoing spending to help run it.
Community Colleges Chancellor Eloy Ortiz Oakley says it will focus on offering job skills certificate courses to Californians who do not have college degrees.
“There are many for-profits that have their sights set on these learners, and we feel a public, affordable, quality option is the best option,” says Oakley.
The plan calls for students to begin enrolling in 2019. Oakley calls the timeline aggressive.
But California’s public college and university systems and faculty argue the governor’s budget proposal leaves them short.
The plan would increase state spending for UC and CSU schools by one to two percent of their total budgets.
“Really the CSU is desperately underfunded compared to the way it was 25 or 30 years ago, and it’s really starting to show,” says Jennifer Eagan of the California Faculty Association.
“It is enough. You get 3 percent more, and that’s it,” Brown preemptively retorted. “They’re not going to get anymore. And they got to manage. I think they need a little more scrutiny over how they’re spending things.”
Some Democratic lawmakers expressed concern over the funding level, which Brown will need to negotiate with the Legislature for the final state budget in June.
Proposal Could Block Hospitals And Clinics From Some Drug Discounts For Medi-Cal Patients
Sammy Caiola, Capital Public Radio Health Reporter
For more than two decades, health care organizations that serve low-income patients have gotten a discount on certain drugs, thanks to a federal program called 340B. But a proposal in the new state budget would prohibit hospitals and clinics from getting those discounts if the drugs they’re buying are for Medi-Cal patients.
Nicole Longo, with the industry group Pharmaceutical Research and Manufacturers of America, said this is a way of regulating the program to make sure hospitals aren’t getting “double discounts” from both 340B and Medicaid.
“We believe increased government oversight of the 340B program is greatly needed to ensure program requirements like prohibitions on duplicate discounts are met,” she said.
But Amber Ott from the California Hospital Association said this change could cost hospitals hundreds of millions of dollars in drug costs.
“The hospitals rely on those savings to provide pharmaceuticals to their vulnerable populations, and to maintain access to services for all populations within their communities”
About 170 California hospitals participate in the 340B program. The proposal still has to go through the legislative process, and - if approved- wouldn’t take effect until 2019.
Republicans in the federal government are currently trying to rein in the program as well.
