No Budget Conference Committee Hearings Scheduled – No Budget Agreement Near

State Will Begin New Budget Year Without New Budget – Legislative Leaders and Governor Will Begin Holding Budget Talks – AB 1629 Nursing Home Quality Assurance Fee Stakeholder Conference Call and Meeting By Department of Health Care Services July 1^st Thursday Morning 9 – 10 AM

SACRAMENTO, CALIF (CDCAN) [Updated 06/30/2010  10:55 PM  (Pacific Time)] –  With no agreement even close on a budget deal to resolve the projected $20 billion budget shortfall, California is now just an hour away from beginning the new state budget year  (July 1^st) without a budget in place.

It is not clear yet if the Legislature – except for the legislative leaders and perhaps members of the Budget Conference Committee – will be returning to Sacramento next week after the three day 4^th of July holiday weekend. 

Legislative Summer Recess Technically Begins Friday

The official scheduled summer recess of the Legislature begins after the Legislature adjourns on July 2 (Friday) and reconvening on August 2 (Monday).

In previous years when there was a stalemate on the budget, rank and file members of both houses were forced to remain in Sacramento.  This year however there has been talk that members will be able to leave the State Capitol and return to their districts to work and be “on call” to return to Sacramento on short notice if a budget deal is near. 

An  announcement is expected Thursday or Friday on whether the Legislature will be in recess or back in session next week. 

Impact of No Budget Will Begin To Be Felt Later In July

The impact of no budget won’t be felt immediately – but by the end of the month, and into August, the repercussions will be felt across the state as community-based organizations who provide services and supports to hundreds of thousands of children and adults with disabilities, mental health needs and seniors will be unable to pay their own workers and pay their bills as the State cuts off reimbursements until a budget is in place. 

In-Home Supportive Service workers will still receive their paychecks.  Certain Medi-Cal providers would still receive their reimbursements, including regional centers who coordinate services to persons with developmental disabilities, at least through August.  [CDCAN will issue a report Thursday on what specific programs and services and providers will continue to be paid in the coming month and which will not]

State employees not covered by new collective bargaining agreements will be impacted either through new mandatory furloughs or a temporary reduction in their pay to the State minimum wage that the Governor could order as a result of no budget. 

Other impact of a budget delay will mean certain proposals cannot officially begin, including moving forward to actually begin the steps in the closure of Lanterman Developmental Center in Pomona.  While both budget subcommittees – and houses – have approved the closure plan as submitted by the Governor, and budget related bills that have added additional requirements to the plan impacting health and safety and state worker transitions – none of that is official and state law until a budget is passed by the Legislature and signed by the Governor. 

News From Washington DC Remains Grim On Medicaid Funding Increase

Meanwhile the news from Washington DC impacting California’s budget deficit remains grim, with the US Senate, as of Wednesday evening (June 30^th) still unable to move the bill that would extend for six months into 2011, the temporary increase in Medicaid matching funds to the states. 

That temporary increase – which originally was part of the American Recovery and Reinvestment Act (ARRA) – could bring in as much as $2 billion to California. The Governor’s proposed 2010-2011 State Budget assumes Congress will extend that temporary increase and that California will receive close to that amount – which means if that doesn’t happen, the projected budget shortfall will grow even larger. 
Policymakers in California could deal with that bad news by simply assuming in the 2010-2011 State Budget that the funding increase will still come and if it doesn’t, deal with that budget hole next year.  Legislative Republicans and probably the Governor would likely oppose that approach. 

AB 1629 Nursing Home Quality Assurance Fee Stakeholder Meeting and Conference Call Thursday Morning (July 1^st) From 09:00 AM to 10:00 AM

In another state budget related major issue that is an “open” item in the Budget Conference Committee, the Department of Health Care Services – the state agency that oversees California’s Medicaid program (called “Medi-Cal”) will be holding a stakeholder meeting and conference call Thursday morning (July 1^st) from 09:00 to 10:00 AM to discuss compromise budget related language (“trailer bill language” or TBL) dealing with renewing the AB 1629 nursing facility quality assurance fee. 

The physical meeting site is at the Department of Health Care Services – though anyone wishing to go that location needed to inform the department before close of business on Wednesday (June 30^th). 

People however can still participate via conference call line:

When: July 1, 2010 – Thursday morning from 09:00 AM to 10:00 AM

Conference Line: 1-866-917-1449

Participant Code: 4993949

A copy of the 21 page pdf file containing the Department of Health Care Services’ compromise language, is attached to this report and also available on the CDCAN website at www.cdcan.us

The issue has major impact to nursing facilities covered by the quality assurance fee, their workers, and quality of care issues of people who reside in those facilities. 

OTHER KEY STATE BUDGET UPDATES:

Some key budget updates:

BUDGET CONFERENCE COMMITTEE

• While the Budget Conference Committee phase of the budget process is lasting longer than normal – and is still not over, no hearings are currently scheduled and with no hearings likely until next week at the earliest. 
• The Budget Conference Committee, chaired by Sen. Denise Ducheny (Democrat – San Diego, 40^th State Senate District) last met last week. 
• Budget Conference Committee has not yet taken any final action on nearly all of the major “open” items dealing with health and human services and education, including the Governor’s proposal to suspend the AB 3632 mental health services special education mandate; the different reductions proposed by the Assembly ($150 million savings) and Senate (at least a 10% reduction) to the In-Home Supportive Service program or the additional 1.25% cut to most regional center providers and operations or issues surrounding renewing the quality assurance fee for nursing facilities previously authorized by AB 1629. 
• It is not yet certain yet what role the Budget Conference Committee will play – if any – once the meetings with the four legislative leaders and the Governor begin, and if and when a budget agreement is ever reached.

GOVERNOR AND LEGISLATIVE LEADERS

• The two top Democratic legislative leaders, Senate President Pro Tem Darrell Steinberg (Democrat – Sacramento, 6^th State Senate District) and Assembly Speaker John Perez (Democrat – Los Angeles, 46^th Assembly District) who previously had sharply different proposals to resolve the budget crisis, have come to agreement on a overall framework that includes elements of both of their plans. 
• The Democratic plan includes some new tax increases, including oil severance tax, extending some of the temporary tax increases that are set to expire next year, borrowing, avoiding major cuts to health and human service programs and education and shifting some State responsibilities to the counties.
• The two Democratic leaders met today with Governor Arnold Schwarzenegger to outline their plan and agreed to begin budget talks that will include the two legislative Republican leaders, Senate Republican Leader Dave Hollingsworth (Republican – Murrieta, 36^th State Senate District) and Assembly Republican Leader Martin Garrick (Republican – Carlsbad, 74^th Assembly District), referred to as the “Big Five”.  
• While it is not exactly clear how the process will actually work out if and when the “Big Five” ever reach an agreement – Assembly Speaker Perez mentioned that any deal would be reviewed by the budget conference committee and on the Assembly floor before it was voted on. 
• However no budget deal is even close because the Governor and legislative Republicans are strongly opposed to any new tax increases, extension of the temporary tax increases and borrowing – and have pushed for bigger spending reductions to bring spending in line with current state revenues.  Legislative Republicans have said avoiding larger spending cuts will mean more cuts in the future. 

Democrats Need Some Republican Votes – and Governor To Pass Budget

• Though Democrats control both the Assembly and State Senate, the State Constitution requires passage of a State Budget by 2/3rds vote in both houses, or 54 votes in the 80 member Assembly and 27 votes in the 40 member State Senate. 
• In the Assembly, Democrats control 49 seats and Republicans 28, with one vacancy (63^rd Assembly District formerly held by Bill Emmerson who was elected to the State Senate and is generally regarded as a “safe” Republican seat. No special election has yet been set) and 1 independent – Juan Arambula, a former Democrat who often votes with the Democrats.  Assuming Arambula votes with the 49 Democrats on a budget – that means Democrats in the Assembly still need to get at least 4 Assembly Republican votes.
• In the State Senate, Democrats hold 25 seats, with Republicans holding 14, and one vacancy (15^th State Senate district seat formerly held by Abel Maldonado, who was appointed and confirmed as Lt. Governor). 
• As of now, Democrats need at least two Senate Republican votes for the budget (which could change depending on the outcome of the August 17^th run-off election for the 15^th State Senate District seat between the two major candidates vying for the seat, Assemblymember Sam Blakeslee (Republican – San Luis Obispo) and former Assemblymember John Laird (Democrat – Santa Cruz). 
• Blakeslee, the former Assembly Republican Leader, nearly won the seat outright in the June 22^nd special primary election, winning 49.40% (72,248) to Laird’s 41.81% (61.150), with 5.89% going to Jim Fitzgerald, an independent and 2.90% to Mark Hinkle, a Libertarian.  Blakeslee needed to win 50% plus 1 vote in the primary.  In August the winner only needs to have the most votes. 
• The turn-out for the June 22^nd special primary election was only 31.78% (146,259 persons) out of 460,247 registered voters.  Of the people who did vote, 77.48% (113,322 persons) voted by mail and only 32,937 persons actually cast their votes at a precinct.