Thursday, May 23, 2002

For a more complete look at the numbers, take a look at this abstract released by the Governor's Department of Finance.  (NOTE: This allows you access to the DOF website. You will need Adobe Acrobat Reader in order to open and read these documents.) 11:07:10 AM

Thursday, May 16, 2002

{Extracted from a Larger Sacramento Bee Story.} Health care in peril, officials say Proposed state budget cuts could be 'the last straw' for many doctors and hospitals. By Aurelio Rojas -- Bee Staff Writer Published 2:15 a.m. PDT Thursday, May 16, 2002 Doctors, hospitals and advocates for the poor warned Wednesday that Gov. Gray Davis' proposed budget cuts will devastate the state's ailing health care system. "We have a health care system that's already unraveling, and the state budget crisis will be the last straw for many doctors and many hospitals," said Dr. Jack Lewin, chief executive officer of the California Medical Association. Faced with a $23.6 billion state budget deficit, Davis' revised spending plan announced Tuesday pares spending by $7.6 billion. More than $1 billion will come from health care. {Emphasis Added} The governor defended his plan -- which also calls for tax increases, relies heavily on accounting shifts and borrows from the state's share of the national tobacco settlement -- saying the yawning budget gap left him no choice. California already has nearly 7 million uninsured people. And because hospital emergency rooms are required by law to treat these patients, a growing number of facilities are closing their doors due to insolvency. Health care advocates predict many more hospitals will follow suit as the ranks of the uninsured grow in response to the budget cuts. Dr. John Whitelaw, a Sacramento physician and president of the CMA, said California's contribution to Medi-Cal will move it from 42nd among states to last. The Davis budget proposes dropping what the state pays for the typical Medi-Cal office visit from $20 to $16, according to the CMA. California already has nearly 7 million uninsured people. And because hospital emergency rooms are required by law to treat these patients, a growing number of facilities are closing their doors due to insolvency. Health care advocates predict many more hospitals will follow suit as the ranks of the uninsured grow in response to the budget cuts. Dr. John Whitelaw, a Sacramento physician and president of the CMA, said California's contribution to Medi-Cal will move it from 42nd among states to last. The Davis budget proposes dropping what the state pays for the typical Medi-Cal office visit from $20 to $16, according to the CMA. 12:40:56 PM

Wednesday, May 15, 2002

Harry S Truman. "If you cannot convince them, confuse them." [Adam Curry: Adam Curry's Weblog] 11:22:26 AM

Oracle takes heat for California contract. A lawmaker accuses Oracle and Logicon of "defrauding" California after his review of e-mail sent between the two companies that discussed how to handle a controversial contract. [CNET News.com] 11:19:40 AM

Monday, May 13, 2002

GOVERNOR'S REVISED BUDGET BOMBSHELL DUE MAY 14 Sources Tell ACHD: Major Cuts Expected in All Areas, Health Care Cuts Approach $1 Billion Governor Gray Davis is set to release his revised 2002-2003 budget on Tuesday, May 14.  It promises to include proposed cuts that are likely to upset every major constituency group in the Capitol - though it is unlikely to include at least one budget balancing item:  Major income tax increases. A TRIP DOWN MEMORY LANE:  MAKING A $10 BILLION DEFICIT SEEM 'SMALL' Governor Davis released his initial proposed budget for FY 2002-03 in early January.  At the time, his budget wonks were projecting a total deficit of roughly $10-12 billion.  This was based on anticipated income and capital gains tax revenues, to be collected on April 15 of this year.  Based upon this anticipated deficit, the Governor proposed a number of administrative and budgetary actions designed to bring the state budget into balance.  The Governor's original budget proposal called for roughly $407 million in cuts from health care "safety net" programs (Medi-Cal, Healthy Families, etc.)  Many of these health care providers are already operating with substantial ($1 million-plus) annual deficits. These proposed cuts will place a number of health care providers in underserved communities (in rural and large inner city areas) at risk of closure.  Unfortunately, the California Legislative Analyst, after careful review of the Governor's proposal, determined that Governor Davis' budget was at least $5 billion 'short' of being in balance.  Apparently, certain revenues were over-estimated, and certain administrative actions were unlikely to produce significant anticipated savings. April 15 has now come and gone. So has any hope that the Governor's budget projections were on target.  According to sources close to budget committees in both houses of the legislature, the total deficit could exceed $22 billion.  This figure could worsen, if the state fails to sell recently issued electric power bonds before the close of the fiscal year.  The Governor's revised budget will include cuts in almost every department, agency and program funded by the state.  According to a number of sources in a variety of state agencies, the Governor has directed all departments to implement at least 30% accross-the-board cuts.  Apparently, the budget may even include some adjustment of state general fund contributions to education under "Proposition 98." HOLES IN CALIFORNIA HEALTH CARE 'SAFETY NET' TO GROW State budget experts are now predicting that the proposed $407 million in proposed health care cuts will increase -- perhaps dramatically.  Some estimate that the Governor's revised budget will call for upwards of $1 billion in budget 'adjustments' to state support for "safety net" health care programs.  These could include: Sharp increases in Disproportionate Share Hospital Administrative Fees.  The Governor initially called for a $55 million increase in these fees.  This figure could double. Increases in proposed "co-payments" for Medi-Cal services (essentially, further reductions in reimbursements to providers.) The Governor initially projected $61 million in 'savings' through co-payments of up to $5 per medical visit.  This could increase to as much as $100 million. Further cuts in reimbursements to health care providers could also be imposed. Frankly, there are very few areas that can be cut without imposing substantial "pain" on those who are dependant upon Medi-Cal and similar state programs. The Legislature is prepared to act on the Governor's proposal, literally the moment it is released.  The Senate Budget Committee is slated to finalize its health budget proposals on May 18, and the full Senate will take up its own version of the budget on the Senate Floor on May 23. It is likely to be a very protracted, painful and HOT Summer here in Sacramento. ///pdg           3:43:33 PM

Thursday, May 09, 2002

At The Center of The Storm: Eerie Silence Greets Mounting Deficit Early this year, it was obvious that the FY 2002 California State Budget was headed for the proverbial brick wall.  Even as the Governor was projecting a $10-14 billion deficit, those within the office of the State Legislative Analyst were estimating a revenue shortfall of roughly $15 - 18 billion.  The actual numbers, based on state tax collections to date, place the shortfall at just over $20 billion.  Unfortunately, this total does not include the cost of electricity purchase contracts signed by Governor Davis at the height of the power crisis last summer.  These purchases could add an additional $6 - $9 billion to the total deficit.  That is, unless some miracle occurs between now and the end of the fiscal year - and the municipal bond market quickly snaps up the newly issued California power bonds (this is the single largest municipal bond offering in the history of the United States, by the way.)    Governor Davis is now at the close of his first term, and is running for reelection.  While most pundits feel that the election is largely his to lose - despite a dangerously low 45% approval rating, he can ill afford to be bogged down in a protracted budget fight this summer and fall.  Unfortunately, his only real options for dealing with the deficit are political poison:  Either, A) Impose substantial tax increases, or B) Impose substantial cuts in programs important to core Democratic constituencies, or C) Forge some combination of "A" and "B." Any of these "solutions" will invite strong opposition from a block of legislators that could be enough to block passage of any budget until well into early Autumn. The usual formula for budget delay includes solid opposition from Republican legislators.  However, most expect that the Governor has sufficient support from key Republicans in each house to pass a budget -- if he has solid support from his own party.  That is a BIG "if."  When the Governor releases his revised budget proposal on May 15, most expect that it will include steep cuts in many programs that provide health care and other services to the aged, blind and disabled, working poor and uninsured - otherwise known as the health care "safety net."  These cuts are likely to be STRONGLY opposed by key members of the Democratic Caucus -- in particular, Senate President John Burton  (D - San Francisco.)  Though the Senate President and the Governor are members of the same political party, there have been times that it seemed otherwise.  Senator Burton has made no secret of his opposition to a number of the Governor's budget priorities and proposals in the past.  He has also made it clear that he will oppose ANY cuts in safety net programs, and is urging that the budget be balanced largely through tax increases.  The Governor has traditionally opposed ANY increase in taxes. Clearly, the stage is set for a MAJOR political show-down, and the budget fight this year promises to be both protracted and ugly.  At the moment, there is little being said by either "side" on the issue.  Budget wonks within the Administration are busy slashing away at their already "slimmed down" budget proposal, and Legislative Budget Committee staff are busy looking at every possible option.  No clear picture is emerging yet.  What is clear is that, at $20 billion-plus, this is the largest budget deficit in the state's history (indeed, it rivals the federal deficit in proportional terms,) and the pain inflicted from its resolution are likely to be just as "historic." ///pdg         6:13:39 PM

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