May 27, 2014
CMA Capitol Insight is a biweekly column by veteran journalist Anthony York, reporting on the inner workings of the state Legislature.
Gov. Jerry Brown released his revised budget plan last week, and it was filled with good news. The state’s finances are back in black, and the governor’s plan socks away billions in a new and improved rainy-day fund. The governor even unveiled a proposal to pay down the unfunded debts to the teachers’ retirement system – the second largest public pension system in the nation.
But amid the good news, there was a cautionary tale. According to the administration’s estimates, Medi-Cal rolls will swell to more than 11 million people next year.
Some of the jump is due to the fact that about 900,000 kids formerly on Healthy Families have been folded into the Medi-Cal program. A big portion of the new enrollees are single adults who became eligible when the state adopted new rules under the Affordable Care Act (ACA).
For those two groups, the state’s general fund is not impacted. The state was already paying a match portion of the Healthy Families enrollees, and the federal government is paying 100 percent of the costs for newly eligibles.
But outreach associated with the ACA has driven hundreds of thousands of previously eligibles – parents or kids living at or below the federal poverty line – to enroll. That, accompanied by increasing health care costs, has pushed the state’s health care spending up by billions.
Just how much the state is spending is a matter of some dispute. The Legislative Analyst’s office says the governor is overestimating those increased health care costs. This is important because many Democrats want to expand a number of social safety net programs. If the money is being gobbled up by health care costs, that means less money for universal preschool and other top Democratic priorities.
Also missing from the governor’s budget plan was any increase in Medi-Cal provider rates. While the administration has agreed not to seek a retroactive 10 percent cut in provider rates, there is still no apparent willingness on behalf of the governor’s office to stop the cuts going forward.
For doctors and other health care providers, the twin trends are creating simultaneous pressure. While more and more people move to Medi-Cal, California continues to offer the lowest provider rates in the nation. Doctors who treat Medi-Cal patients are finding it increasingly difficult to sustain their practices because of the low reimbursement rates, just as there is an ever increasing demand for doctors to serve those most in need.
The California Medical Association is still spearheading a bipartisan effort to include provider reimbursement rates in the June budget discussion. It’s just one of the many sticking points remaining as Democratic leaders and Gov. Brown hammer out the final details on a new state spending plan.
Rainy Days (and Lack Thereof)
If you blinked last month, you missed the rewriting and quick legislative passage of a new rainy-day fund plan. Lawmakers voted unanimously to put a spending reserve proposal before voters on the November ballot – the same ballot where Jerry Brown will be running for reelection preaching his message of fiscal prudence. See how that works?
While there was quick action on the budget proposal, agreement remains elusive over a water bond proposal. Despite increased political interest in water issues because of the drought, lawmakers have yet to come to agreement on a pared-down bond measure to replace the current $12 billion bond currently scheduled for a November vote. That bond has been tagged as a dead-bang loser by proponents and opponents alike because of its size and the perception that it was loaded up with pork just to get it on the ballot.
Gov. Jerry Brown has been reluctant to wade into the water wars. For starters, placing a new borrowing plan on the ballot doesn’t fit nicely with that fiscal steward message mentioned above. But he also knows first hand the dangers of water politics. In 1982, as California elected a replacement for Brown while sending him to a defeat for U.S. Senate at the hands of Pete Wilson, voters also repealed Brown’s plan for a peripheral canal that would move water from the northern half of the state to the south.
As he prepares to coast to reelection this fall, Brown appears to want no part of the muddy water politics that would need to be overcome for a new bond measure.
It’s election month in California, and as of this writing, millions of voters have already cast their ballots. More than 50 percent of the ballots cast this spring are expected to be absentee, and turnout is anticipated to be embarrassingly low.
The real question is whether there is enough time for wood-chopping neophyte Neel Kashkari to unseat fellow Republican Tim Donnelly in the race for the right to be crushed by Brown in November. The outcome of the race may not have much impact on who eventually holds the office, but is seen as a bellwether for the California Republican Party.
Around the country, the GOP establishment successfully beat back a number of challenges from Tea Party candidates. But in California, according to the latest PPIC poll, Donnelly still holds a 5-percentage point lead over Kashkari.
Moderates are rallying to Kashkari’s defense. GOP sugardaddy Charles Munger Jr. has plunged a few hundred thousand into a new independent expenditure committee in hopes of wresting the nomination away from Donnelly. But with so many ballots already cast, the question is whether there are enough potential voters left to influence the race.