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Current Status of the Budget
On Wednesday, June 15th the Senate and Assembly passed by majority vote the main budget bill – AB 98. Both houses lacked the 2/3rds majority vote necessary to approve Governor Brown’s revenue proposals, which would have resulted in $10.8 billion in new revenue.
On June 16, 2011 Governor Brown vetoed AB 98 and SB 69 – the two budget bills approved by the Legislature (AB 98 was approved on June 16th and SB 69 was approved in March). The Governor’s explanation for his veto is that the budget is unbalanced, contains too much borrowing, and does not contain the revenue extensions he proposed in January.
The final budget package contains $12.5 billion in spending cuts that were adopted in the spring. These included $5 billion in cuts to health and human services programs, including nearly $500 million to the In-Home Supportive Services program. Due to a lack of the 2/3rds vote necessary to approve the Governor’s proposed tax extensions, the budget package also contained $10.3 billion in additional actions, such as one-time federal funding, restoration of local sales tax rates, and deferment of Proposition 98 spending. These actions, in conjunction with increased revenue estimates and other offsets, addressed the unprecedented state budget deficit of $27.6 billion.
Senate President Pro Tem Steinberg and Assembly Speaker Perez held a press conference the morning of June 16th to express their serious displeasure with the Governor’s veto. They stated that Democrats in the Legislature have worked diligently for the last six months to assist the Governor in implementing his proposed budget. However, this proposal was rejected by Republican legislators time and time again. In light of the June 15th deadline to pass a budget, Legislative leaders were compelled to move forward with “Plan B” – a budget deal that could be approved on time with a majority vote. Though it did not include the billions of dollars of revenue sought by the Governor, the budget eliminates over 60% of the state’s persistent structural deficit. According to Senator Steinberg, “the Governor is …. a little bit confused between total victory, which in this process cannot be achieved in one year, and progress.”
The alternative to the current budget deal is unclear. According to Senator Steinberg and Speaker Perez, there is no Democratic support for further cuts to programs and services. If the Governor chooses to pursue further spending cuts, they would not assist him in garnering Republican support.
The Budget Package Approved by Assembly and Senate Legislators on June 15, 2011
AB 98 enacted a combination of further reductions, one-time shifts, deferrals, and other measures to make up for the remaining budget deficit.
Major components of the budget package include:
- $700 million in one-time federal funding for the Medi-Cal program
- $300 million additional reduction to University of California and California State University systems
- $2.85 billion deferral in K-15 Proposition 98 spending
- Reduction and redirection of local Proposition 10 funding to children’s Medi-Cal services ($1 billion savings)
- Ends “revenue exchange period” resulting in ¼ percent increase in local sales and use taxes ($900 million savings)
- Revised state building lease transaction ($1.2 billion new revenue)
- Updated revenue estimates since the May Revision ($815 million)
By the Legislature’s own account, these budget solutions will only partially address California’s long-term structural budget problems. This means that we can expect to see more budget deficits in the near future.
The Senate and Assembly also passed a series of budget trailer bills which essentially implement the provisions of the main budget bill. These bills are additions to the budget trailer bills passed by the Legislature and signed into law by the Governor in March.
AB 106, the human services budget trailer bill which included changes to IHSS was among the budget trailer bills that were adopted. Importantly, the bill did not include any major changes to the IHSS program.
Next Steps
At this time, UDW is in conversation with allies about next steps. We will keep you posted as the situation develops
Governor’s Proposal (January 2011)
Governor Jerry Brown submitted his budget to the state legislature on January 10, 2011. Faced with an unprecedented deficit of $26.6 billion, the Governor proposed approximately $12.5 billion in spending cuts, approximately $12 billion in increased revenues and approximately $1.1 billion as a reserve. The spending cuts included a $486.2 million reduction to the In-Home Supportive Services (IHSS) program. This reduction was achieved by a combination of across the board cuts ($127.5 million), the elimination of domestic and related services for most recipients ($236.6 million), the elimination of services for those without a physician’s certification ($120.5 million), and the elimination of state funding for IHSS Advisory Committees ($1.6 million).
The Governor also proposed an expedited 60-day timeline for the Legislature to approve his budget proposals. This was done in order to hold a special election on his revenue proposals in June.
Legislative Actions (February and March 2011)
Assembly and Senate budget subcommittees began meeting to discuss the Governor’s budget on January 27th. Ultimately, both houses voted to reject the majority of the Governor’s proposed cuts to IHSS, though the savings target of $486.2 million remained. On March 17th, the legislature passed budget legislation that included the following provisions related to IHSS:
- A requirement that all recipients obtain certification from a licensed health care professional that without IHSS services the recipient is at risk of being placed in institutional care (estimated savings of $120 million).
- A mandate for the state’s participation in the new Community First Choice Option available under Federal law as of October 1, 2011 (estimated savings of $128 million).
- The elimination of the mandate and most of state funding for IHSS Advisory Committees (estimated savings of $1.4 million).
- A mandate for the implementation of the Medication Dispensing Pilot Project beginning July 1, 2011. The goal of the pilot is to reduce hospitalization and institutionalization resulting from medication noncompliance among high-risk Medicaid recipients. There is a stipulation that should the requisite savings not be achieved by July 1, 2012, there will be a mandatory across the board reduction in service hours for all IHSS recipients (estimated savings of $140 million).
