CMA Capitol Insight: May 11, 2015

May 11, 2015
Area(s) of Interest: Advocacy 

CMA Capitol Insight is a biweekly column by veteran journalist Anthony York, reporting on the inner workings of the state Legislature.

Ballot measures and budgets

The fight for 2016 is officially underway, as initiative proponents begin to file their ballot proposals with the attorney general’s office. Among the major policy proposals beginning the process is a new tobacco tax backed by health care providers to help ensure network adequacy for California’s poor.

The new Save Lives California Coalition, which includes the American Heart and Lung Associations, as well as the California Medical Association (CMA) and the Service Employees International Union (SEIU) of California, filed two proposals with the attorney general’s office, and will decide which alternative to put on the ballot later this year.

The initiatives would raise the tobacco tax by $2 per pack, and earmark much of the $1.5 billion raised to increase Medi-Cal provider rates.

While California’s budget is booming, with billions in surplus revenues expected when the governor unveils his budget revision next week, state budget formulas direct nearly all of that money to schools or the state’s new rainy day fund. Meanwhile, Gov. Jerry Brown remains opposed to increasing Medi-Cal reimbursement rates, despite wide bipartisan support for those efforts.

The budget reveals one thing: the wealthy in California are doing excessively well. But that is simply not the case for too many California residents. A new study from the University of California shows the number of people making less than $13 per hour has increased. These low-wage workers now comprise one-third of our state’s workers.

Meanwhile, wages for those at the top are increasing, while real wages for those in the bottom 60 percent have fallen over the last two decades.

So how does this tie into the tobacco tax?

The Affordable Care Act promised an expansion of health care coverage to millions of people around the country who were previously unable to obtain coverage. The main driver of that expansion in California has been the Medi-Cal program.

But with some of the lowest state reimbursement rates for Medicaid providers in the nation, fewer doctors are able to see new Medi-Cal patients. So while people are accessing health insurance for the first time, they are finding it nearly impossible to actually get in to see a doctor and get the quality care they need.

That is the promise of the new initiative effort – to find another way to help increase the provider network to ensure a properly working safety net for Californians who continue to struggle, even as the richest in the state enjoy record wealth.

The discussion of taxes also heated up this week, as a new progressive coalition announced an effort to change Proposition 13. The proposal would increase the frequency at which commercial property taxes are assessed. An estimate from the University of Southern California estimates that the plan could generate $9 billion in new property tax revenues.

Other efforts underway include a proposal to extend the upper income taxes of Proposition 30, which begin to roll off the books in 2018. Gov. Brown has said he is opposed to any extension of the taxes he promised would be temporary when he sold them to voters in 2012.

Sen. Robert Hertzberg has another proposal that would lower income taxes, but extend sales taxes to a number of services currently excluded from tax. The proposal is still being crafted, but has raised early concerns from some on the right and the left.

The tax talk will heat up later this year. For now, the focus in the Capitol is on the budget, as Gov. Brown prepares to unveil his new May Revision. With strong Democratic majorities in the Legislature, and revenues pouring in, it is not expected to be a contentious negotiation. But it will be the first for this new set of legislative leaders, with two new faces in the mix – Senate Leader Kevin de Leon and Assembly Republican Leader Kristin Olsen.

It will also be the first test of the state’s new rainy day fund, Proposition 2, which was passed by voters last fall. With the constitutional guarantees to schools and the new reserve fund, there is wide speculation that there will be little left over to fund social service programs championed by Democrats.

While it won’t echo the epic budget battles of years past, there are sure to be some skirmishes, between the houses and within the Democratic leadership in Sacramento, about how best to spend the budget windfall we are all expecting later this week.


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