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:
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Sharp increases in Disproportionate Share Hospital Administrative Fees. The Governor initially called for a $55 million increase in these fees. This figure could double.
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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.
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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 
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