Statement from Chris Hoene on the Governor’s Proposed 2013-14 Budget

January 10, 2013

Today, Governor Jerry Brown released his proposed 2013-14 budget. In response, Chris Hoene, executive director of the California Budget Project, a nonpartisan public policy research group, released the following statement:

“The Governor’s budget proposal shows that the significant new revenues approved by the state’s voters this past November have stabilized California’s finances. With the state’s fiscal situation improving after years of severe budget shortfalls, it’s time to start rebuilding the public services and systems that are essential to all Californians.

“The Governor’s proposed budget represents a major step forward on many fronts. His budget includes a new K-12 school funding formula that aims to increase funding for disadvantaged students. The Governor also proposes to expand Medi-Cal as envisioned under federal health care reform, increasing low-income Californians’ access to affordable health care.

“But at the same time, state policymakers could do more to restore the severe cuts made in recent years to child care and other supports that help families struggling to find and keep jobs. And with an eye toward long-term fiscal stability, the state could scale back or end ineffective tax credits and incentives, such as the costly Enterprise Zone Program.

“California is turning the corner on years of serious budget challenges. Our state now has the opportunity to choose a fiscally responsible path while reinvesting in vital public services that foster economic growth and contribute to broadly shared prosperity.”

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Restoring Balance, Reinvesting in the Future: The California Budget in 2013

January 8, 2013

As we embark on 2013, California faces a moment of unique opportunity. The state’s economy is beginning to rebound from the Great Recession, while the significant new revenues approved by voters this past November have California poised to emerge from years of severe budget deficits.

The key word here is “poised,” as the Legislative Analyst’s Office (LAO) projects the state to face a $2 billion deficit this year, with future budgets moving into the black by 2014-15. The good news is that a $2 billion shortfall pales in comparison to the deficits of the past decade, which means that we are not likely to see the kinds of deep programmatic cuts made in recent years. The bad news is that the state is digging out of a deep hole, with revenues still significantly short of pre-recession levels. For the current fiscal year (2012-13), General Fund revenues as a share of the state’s economy are down by almost one-sixth from prior to the start of the Great Recession.

Meanwhile, other serious challenges remain. Poverty and long-term unemployment are high. The gap between high- and low-wage earners has widened dramatically over the past generation. In addition, the deep budget cuts of recent years have frayed the social safety net and battered other public systems and services that underpin a strong economy and a high quality of life.

So, while there are signs that California is turning the corner and emerging from the Great Recession and its impacts, the near-term outlook for many families and communities remains tenuous. State leaders, advocates, and stakeholders around the state will confront challenging trade-offs in 2013 between ensuring fiscal stability and reinvesting in the future.

Turning the corner. Restoring balance. Reinvesting in the future. These are themes that will run through the California Budget Project’s work during 2013 and beyond, as we seek to foster a budget policy debate that is broadly inclusive and fact-based. We often remind people that budgets are about values and priorities. The list of items needing to be prioritized is perhaps longer than a $2 billion deficit will allow: investing in education, health care, workforce development, infrastructure, and other public programs and services that position the state for a robust recovery and long-term economic growth.

A multiyear, balanced approach that accounts for 2013 budget realities while drawing on options on both the revenue and spending sides of the ledger will be critical to maintaining stability in the state’s fiscal situation and fostering a bright economic future for California.

— Chris Hoene

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Expanding Medi-Cal: We’re Not Starting From Scratch

December 21, 2012

California isn’t starting from square one as the state moves toward expanding Medi-Cal coverage to most low-income adults under age 65, pending approval in 2013 by state lawmakers and Governor Brown. Under a 2010 agreement with the federal government, California established a temporary, county-based Low Income Health Program (LIHP) that is building a bridge to an expanded Medi-Cal Program in 2014. LIHP provides health coverage to uninsured adults ages 19 to 64 who meet citizenship or immigration requirements and are excluded from Medi-Cal under current eligibility rules. The income of participating adults cannot exceed 200 percent of the federal poverty line (a limit equal to $22,340 for an individual in 2012), although counties generally may — and in many cases have — set lower eligibility thresholds. County participation in LIHP is voluntary; counties that opt into the program have half of their LIHP costs paid by the federal government. As of September 2012, more than 500,000 low-income Californians across 50 counties were enrolled in LIHP.

LIHP provides vital health care services to low-income adults who otherwise would be uninsured. It’s also bringing substantial federal dollars — projected to reach nearly $3 billion — into California’s health care sector and the broader state economy. But even more, LIHP is helping to prepare California for the expansion of Medi-Cal as envisioned in the federal health care reform law. This is because nearly all of the adults enrolled in LIHP — along with many other low-income Californians — would be newly eligible for Medi-Cal under the expansion. In fact, state officials are already planning for the transition of eligible LIHP enrollees to Medi-Cal effective January 1, 2014. At that point, the federal government will pay 100 percent of the cost of coverage for this new group of Medi-Cal beneficiaries through 2016, with the state picking up a small share of the cost in subsequent years. So, for anyone wondering when the Medi-Cal expansion will begin in California, LIHP provides an answer: It’s already under way. It’s now up to state policymakers to maintain the current momentum and propel the expansion — a key component of federal health care reform — across the finish line.

— Scott Graves

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Expanding Medi-Cal: Small State Cost, Big Impacts

December 19, 2012

In January, the Legislature likely will begin considering how to implement a key component of the federal health care reform law in California: the expansion of Medicaid coverage to most people with incomes at or below 138 percent of the federal poverty line (an eligibility limit that currently is $15,415 per year for an individual). As we noted in a blog post last week, the vast majority of the cost of the expansion will be covered by the federal government, including 100 percent of the cost from 2014 to 2016. As a result, the expansion is likely to have a relatively minor impact on the state budget. This assessment is reinforced by a new report from the Kaiser Family Foundation. The report, authored by researchers from The Urban Institute, uses a rigorous study design to estimate the impact of boosting access to Medicaid — known as Medi-Cal in California — in all 50 states.

The cost to California of expanding Medi-Cal coverage is projected to account for less than 2 percent of total state Medi-Cal spending over the next 10 years. Specifically, the report projects that California is on track to spend about $375 billion on Medi-Cal between 2013 and 2022 — without taking the Medi-Cal expansion into account. Expanding Medi-Cal as envisioned in the federal Affordable Care Act would add only about $6 billion to the state’s costs over this 10-year period, equal to just 1.7 percent of total projected state Medi-Cal spending.

The study estimates that the state’s relatively modest $6 billion investment would allow an additional 1.9 million Californians to access affordable health care coverage through Medi-Cal in 2022 alone. In addition, the study projects that expanding Medi-Cal would bring nearly $69 billion in additional federal dollars — 11 times the state’s investment — into California’s health care sector and the broader state economy over the next decade. That’s quite a bang for the state’s health care buck.

— Scott Graves

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Expanding Medi-Cal: The Next Step on the Road to Health Care Reform

December 14, 2012

Since President Obama signed the Affordable Care Act (ACA) in 2010, California has taken a number of steps to fulfill the promise of federal health care reform for the millions of Californians who lack access to affordable health coverage. With health care reform set to take full effect in 2014, the next big step is just around the corner: the expansion of Medi-Cal coverage to low-income adults under age 65 who currently are excluded from the program. This group includes nondisabled adults who don’t have children at home. It also includes parents who do have kids at home, but who lose access to Medi-Cal when their incomes rise more than a few percentage points above the federal poverty line – currently $19,090 for a family of three. Low-income adults under age 65 are much more likely than other Californians to lack health care coverage, as the following chart shows.

The ACA requires states to expand their Medicaid programs to cover most people with incomes at or below 138 percent of the poverty line – currently $15,415 per year for an individual or $26,344 for a family of three – beginning on January 1, 2014. The federal government will pay 100 percent of the cost of the expansion for the first three years, gradually reducing the federal share to 90 percent of the cost in 2020 and beyond. However, the Supreme Court’s landmark decision on the ACA this past June limited the federal government’s ability to compel states to implement the Medicaid expansion as envisioned in the health care reform law. As a result, some states wondered whether they could limit their expansion of Medicaid by setting a threshold below 138 percent of the poverty line and still expect the federal government to pay all of the cost from 2014 to 2016. This week, the Obama Administration provided an answer: No. As a result, a partial Medicaid expansion is not in the cards in the near term as health care reform continues to move forward in California and other states.

Governor Brown is expected to call a special session of the Legislature for early 2013 to address a number of remaining health care reform issues, potentially including the expansion of the Medi-Cal Program. We’ll have more to say about all of this in the weeks to come. But for now, it’s clear that expanding Medi-Cal can’t come soon enough for low-income adults who lack affordable health care options.

– Scott Graves

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Save the Date: Our 2013 Annual Conference Is March 14

December 11, 2012

As we move into 2013, California is poised to emerge from many years of serious budget shortfalls, while the state’s economy is beginning to recover from the Great Recession. What key questions, opportunities, and challenges does this moment present for those working toward public policies that improve the lives of low- and middle-income Californians?

Come be a part of the discussion, and find out what to expect in the next year and beyond, at the CBP’s annual conference, Turning the Corner: Restoring Balance and Reinvesting in California’s Future. The event will be held at the Sacramento Convention Center on Thursday, March 14, 2013, from 8:30 a.m. to 4:30 p.m.

We hope you’ll plan to join hundreds of the state’s leading advocates, policy experts, and community leaders at this event. Registration information will sent out via email in the coming weeks and also will be shared on this blog.

– Steven Bliss

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Statement: Chris Hoene on the Legislative Analyst’s Office Forecast

November 15, 2012

In response to the Legislative Analyst’s Office (LAO) long-term fiscal forecast released yesterday, Chris Hoene, executive director of the California Budget Project, released the following statement:

“The new LAO forecast shows that California is well positioned to turn the corner on a decade of severe budget challenges and begin reinvesting in areas that are critical to our state’s economy and to the health and general well-being of communities statewide. Due in part to the new revenues approved by California voters earlier this month, the state has an opportunity to restore balance to the budget and begin rebuilding its key public systems and programs.

“But even with this brighter outlook, it’s important to remember that many years of deep spending cuts have hit virtually all areas of the budget, from education to health care. With our state just starting to recover from the Great Recession and many families still feeling the effects of the downturn, we need to provide a strong safety net and ensure sufficient funding for key services and supports — such as child care — for individuals struggling to find and retain work.

“Moving forward, state policymakers should strive for budget decisions that permanently place the state on solid financial footing while also reinvesting in public systems that are essential to all Californians and to broadly shared economic growth.”

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