The bill, Senate Bill 125, responds to new federal limits on how states may tax health plans. California’s managed care organization tax, known as the MCO tax, is charged to health plans that coordinate care for their members. Until now, California has taxed Medi-Cal plans at a higher rate than private health plans, allowing the state to generate billions of dollars annually and draw additional federal matching funds for Medi-Cal.

Under the revised plan approved by the Legislature, Medi-Cal plans and private plans would be taxed at the same monthly rate: $8.85 per enrollee. If signed by Gov. Gavin Newsom and approved by the federal government, the change would shift more of the tax burden onto privately insured Californians while producing less revenue overall than the current structure.

The issue matters across Southern California and the Inland Empire, where many families already face rising health care costs and where Medi-Cal covers large numbers of low-income residents, children, seniors and people with disabilities.

Senate President Pro Tem Monique Limón, a Santa Barbara Democrat, acknowledged this week that lawmakers were not choosing from ideal options. She said the Senate still had concerns, but the state needed to act quickly to protect revenue amid changes at the federal level.

“We have as a Senate been very clear that we needed revenue,” Limón told reporters, describing the decision as one lawmakers believed they could manage while federal rules continue to shift.

The federal changes stem from a tax and spending law passed by Congress last summer. Those rules restrict provider taxes, including taxes on health plans. Under the previous structure, California received nearly $8 billion a year from the MCO tax, according to the Legislative Analyst’s Office. The new federal limits are expected to reduce that amount by billions of dollars.

The Legislature’s proposal would not directly increase insurance premiums. Instead, it would raise taxes on private health plans, which say they would pass those costs on to customers.

The Legislative Analyst’s Office has estimated that if health plans pass along the full cost, privately insured Californians could see monthly premiums rise by about 1.5%. That would come in addition to routine annual premium increases.

The California Association of Health Plans estimates the added tax could cost consumers roughly $100 more per year in premiums. For a family of four, the increase could amount to about $400 annually.

Charles Bacchi, president of the association, said taxes and fees are factored into the administrative portion of insurance premiums.

“That is just actuarial science,” Bacchi said. “So when you increase taxes on health plans and insurers, that is built into premium rates and the customer pays it.”

The Newsom administration has said the proposal seeks to balance affordability concerns for people with private insurance against the need to maintain funding for Medi-Cal as federal support shrinks.

H.D. Palmer, a spokesperson for the state Department of Finance, said the $8.85 monthly assessment was chosen because it would generate about $2.3 billion a year, similar to the amount California received before 2023 to support Medi-Cal. About $2 billion would go toward existing Medi-Cal services, while roughly $300 million would support previously approved rate increases for providers offering primary care, maternity care and mental health services to Medi-Cal patients, Palmer said.

Some lawmakers voiced reservations even as the bill moved forward. Sen. Akilah Weber Pierson, a San Diego Democrat and physician, called the proposal “extremely problematic” during a Wednesday hearing and said she was uncomfortable with the cost it could impose on families. She ultimately voted for the measure Thursday.

Health plans, physician groups and the California Hospital Association urged lawmakers to reject the proposal in its current form.

After the Assembly approved the bill, the California Association of Health Plans criticized the vote, saying it clashed with state leaders’ stated focus on affordability.

“It is difficult to reconcile those statements with a vote that will increase health insurance premiums on the very people policymakers say they are trying to help,” the group said.

Opponents also argue the proposal conflicts with Proposition 35, the 2024 voter-approved measure that limits taxes on private health plans and requires much of the revenue to be used to expand Medi-Cal services and increase provider rates, rather than backfill general fund spending.

Dr. René Bravo, president of the California Medical Association, said using higher insurance costs to help stabilize the state budget would hurt families.

“Raising health insurance premiums to help balance the state budget is simply robbing Peter to pay Paul,” Bravo said. “It will only make it harder for families to keep coverage and get the care they need.”

California is being forced to redesign the tax because of new federal rules issued under last year’s congressional spending plan. The state’s current approach taxed Medicaid plans more heavily than commercial plans, then used the proceeds to draw down federal matching funds.

Federal officials under the Trump administration have argued that states have used such arrangements to shift Medicaid costs to the federal government. The Centers for Medicare and Medicaid Services issued a final rule earlier this year barring states from taxing Medicaid plans at a higher rate than private plans.

Now that the Legislature has approved the revised tax plan, Newsom must sign it before California can seek federal approval. Budget observers expect him to do so because the proposal closely mirrors the administration’s own plan.

Consumer advocates say preserving MCO tax revenue is essential to keeping Medi-Cal stable. But they also say lawmakers should ensure that any added costs paid by privately insured residents are used to improve health care, not simply to reduce pressure on the state budget.

Kiran Savage-Sangwan, executive director of the California Pan-Ethnic Health Network, said consumers should not be asked to pay higher premiums only to have the money backfill the general fund.

The largest remaining uncertainty is whether the federal government will approve California’s revised tax structure. Without that approval, the state would not be able to continue using the tax to draw down federal matching funds.

Adriana Ramos-Yamamoto, a senior policy fellow at the California Budget and Policy Center, said lawmakers’ task is to craft a plan that complies with the new federal rules. But approval is not assured.

“It’s not a guarantee that the federal government will approve our new MCO tax proposal,” she said.

Original source: CalMatters

The post California Weighs Health Insurance Tax Increase as Consumers Watch Premiums appeared first on The Hemet & San Jacinto Chronicle.

That expectation did not last long.

Only months into his term, Davis publicly bristled at legislative leaders who were pursuing priorities different from his own. In an interview with the San Francisco Chronicle’s editorial board, Davis said lawmakers’ role was to carry out the agenda he had campaigned on, arguing that he alone had won a statewide mandate.

The remarks landed hard in Sacramento. Davis was already at odds with Senate President Pro Tem John Burton and Assembly Speaker Antonio Villaraigosa, who wanted to focus on health insurance while the governor put education proposals at the center of his agenda. The conflict grew so bitter that Burton and Villaraigosa effectively cut off communication between Davis’ aides and legislative staff.

The episode became an early example of a recurring force in California politics: Even when the governor and legislative leaders belong to the same party, the rivalry between the executive branch and the Legislature often shapes — and sometimes stalls — the state’s agenda.

That dynamic is surfacing again as Gov. Gavin Newsom enters the final stretch of his governorship and looks toward what is widely expected to be a presidential campaign.

This time, the conflict centers on the state budget and the size of California’s ongoing deficit. Newsom is seeking to close a series of multibillion-dollar shortfalls that followed years in which state spending outpaced revenue. His revised budget proposal totals $349.4 billion, and he has described it as balanced not only for the coming fiscal year but also for the first budget cycle after he leaves office.

To get there, Newsom’s plan restrains spending in areas that are central to Democratic lawmakers’ priorities, including education, health care and social services. Those programs are closely watched across Southern California and the Inland Empire, where large numbers of residents rely on state-funded services such as Medi-Cal, California’s health insurance program for low-income residents.

Since Newsom released his revised budget in May, lawmakers have faced pressure from advocates who oppose reductions to safety-net programs. Organizations representing health care providers, schools and social service programs have warned that cuts or delays could affect vulnerable Californians and local agencies that already operate under tight budgets.

Legislative leaders responded last week with their own budget plan, released ahead of Monday’s constitutional deadline for passing a spending blueprint. Their proposal would restore many of the reductions Newsom recommended or postpone them for the next governor to address. Compared with Newsom’s plan, the Legislature’s version would increase spending by more than $6 billion.

That difference is at the heart of the dispute. Newsom is pushing for a tighter budget that reduces the gap between revenue and spending. Legislative leaders are betting that state revenues will improve and want to avoid deeper cuts now.

Senate President Pro Tem Monique Limón, a Santa Barbara Democrat, said the Legislature’s approach is intended to prevent severe reductions to programs that many Californians depend on to get by.

The passage of a budget bill by the deadline does not end the negotiations. Newsom and lawmakers now have until the start of the new fiscal year on July 1 to reach agreement on a final spending plan that authorizes specific expenditures.

The coming negotiations will test how much influence Newsom retains as his time in Sacramento winds down. Governors typically have significant leverage in budget talks, but that power can weaken as they approach the end of their tenure. Lawmakers, meanwhile, must answer to districts where constituents may be more concerned about health care, schools and public benefits than about the governor’s long-term political future.

The tension is familiar. California governors often enter office claiming a statewide mandate, while legislators argue that they represent the needs of their communities and must protect the programs their constituents rely on. Party unity can narrow ideological differences, but it rarely erases the institutional competition between the branches of government.

For Davis, that rivalry emerged almost immediately. For Newsom, it is playing out near the end of his governorship, with the stakes centered on how California manages a difficult budget and who will bear the consequences of closing the gap.

Original source: CalMatters

The post Capitol Tensions Flare as Newsom and Lawmakers Clash Over Budget appeared first on The Hemet & San Jacinto Chronicle.

The Legislature is expected to approve a budget to meet its constitutional deadline and ensure lawmakers continue to be paid. But the spending plan passed by lawmakers is not expected to be the final version. Newsom and legislative leaders still must resolve major differences over education, health care, homelessness and county-administered benefits.

For Inland Empire families, school districts and county agencies, the outcome could affect everything from classroom funding and subsidized child care to in-home care services and public assistance eligibility reviews.

One of the sharpest divides is over education. Newsom has proposed reducing the number of state-supported child care slots by 6,800. Democratic lawmakers instead want to expand subsidized child care by 22,000 slots over the next several years. They also are seeking $2.7 billion more than the governor’s plan for transitional kindergarten through 12th grade schools and community colleges.

Health care is another major sticking point. Lawmakers from both parties oppose Newsom’s proposed reductions to the In-Home Supportive Services program, which helps older adults and people with disabilities remain in their homes with assistance from caregivers.

Democratic leaders also want to delay by one year Newsom’s proposed restrictions on health coverage for undocumented immigrants. In addition, lawmakers are looking to postpone a decision on increasing the monthly Medi-Cal premium paid by undocumented immigrants, effectively leaving that issue for the next governor.

State Sen. John Laird, a Santa Cruz Democrat who chairs the Senate budget committee, said the dispute is less about challenging Newsom than trying to avoid cuts where possible.

“I don’t think it’s about Gavin Newsom,” Laird said. “It’s really about trying to stretch as far as we can in the hope that we don’t have to make those cuts.”

Democrats hold supermajorities in both the Assembly and Senate, meaning they do not need Republican votes to approve a budget. Still, Newsom’s approval is required for the final spending plan.

The Legislature’s proposal also would increase homelessness funding. Lawmakers want to set aside $900 million for the state’s homelessness fund, compared with $500 million in Newsom’s proposal.

Counties also would receive additional funding under the legislative plan to carry out new federally required eligibility checks for Californians applying for food assistance and health care benefits. That issue could be significant for large counties such as Riverside and San Bernardino, where public assistance caseloads are substantial.

There are some areas of agreement. Newsom and lawmakers both support setting aside $300 million to help subsidize private health coverage for low-income Californians. Lawmakers also appear to be backing the governor’s proposal for three new tax measures.

Another budget-related dispute involves the California Department of Motor Vehicles. Lawmakers want to withhold $55 million from the DMV over concerns about a planned database that would handle information requests involving California drivers and drivers from other states.

Newsom’s office and the DMV say the data-sharing system is necessary to comply with the federal Real ID Act of 2005 and would involve a nonprofit organization made up of motor vehicle administrators from across the country. Immigration advocates, however, have raised concerns that the information could put undocumented Californians at risk if federal immigration enforcement agencies obtained access to it.

The budget negotiations come as other state races and policy debates continue to unfold. Campaigns for California’s Board of Equalization, the nation’s only elected tax board, have drawn more than $3.3 million in donations to three state lawmakers who advanced to the November ballot: Assemblymember Mike Gipson and state Sens. Tom Umberg and Shannon Grove. The board has far less authority than it once did, but donors and analysts say contributions may reflect attempts to influence sitting lawmakers or reward them for past positions.

Environmental officials also are weighing changes to protections intended to keep invasive golden mussels out of Lake Oroville, one of California’s largest reservoirs, prompting concern from some experts.

For now, the immediate focus in Sacramento remains the state budget. Lawmakers are expected to meet their deadline, but the final decisions — including how much California will spend on schools, child care, health care and homelessness programs — remain subject to negotiations with the governor.

Original source: CalMatters

The post California Lawmakers Push for Higher Education Spending as Newsom Weighs Budget appeared first on The Hemet & San Jacinto Chronicle.

The vote is expected largely because legislators must pass a balanced budget by June 15 under the state Constitution in order to continue receiving pay. But the spending plan approved by the Legislature is not likely to be the final version. Lawmakers and the governor have until July 1 to reach a final agreement on health care, education, homelessness funding and other major programs that affect communities across California, including the Inland Empire.

A major point of disagreement is health care spending. Newsom proposed cuts in response to reduced federal funding tied to a tax and spending law signed last year by President Donald Trump. His plan included restrictions on health coverage for undocumented immigrants, as well as refugees, asylees and survivors of human trafficking.

Legislative Democrats want to push those reductions back by one year while they look for ways to reduce the impact. They also oppose Newsom’s proposal to raise monthly Medi-Cal premiums for undocumented immigrants from $30 to $50, preferring to leave that decision to the next governor.

Sen. John Laird, a Santa Cruz Democrat who chairs the Senate budget committee, said the Legislature is trying to buy time and avoid deeper cuts if possible.

Lawmakers also rejected Newsom’s plan to bring back stricter asset tests for seniors and adults with disabilities enrolled in Medi-Cal by July. Instead, they proposed a less restrictive limit beginning in the 2027-28 fiscal year. With bipartisan support, legislators also turned away proposed reductions to the In-Home Supportive Services program, which helps older adults and people with disabilities remain in their homes.

The Legislature did agree with Newsom on one health care item: $300 million to help subsidize private health coverage for low-income Californians.

Education and child care are another central part of the budget debate. Democratic lawmakers want to add 22,000 state-funded child care slots over the next several years and rejected Newsom’s proposed cut of 6,800 state-supported slots. The added spaces would focus on children 3 and younger, an age group advocates say has not benefited from the state’s expansion of transitional kindergarten for 4-year-olds.

Lawmakers are also proposing $2.7 billion more for transitional kindergarten through 12th grade schools and community colleges than Newsom included in his May budget revision, based on a more optimistic revenue forecast.

Still, education groups say the Legislature did not go far enough. They had urged lawmakers to reject Newsom’s plan to withhold $3.9 billion in constitutionally guaranteed school funding as a way to avoid overpaying districts if projected revenue does not arrive.

David Goldberg, president of the California Teachers Association, accused state leaders of relying on budget maneuvers instead of fully funding schools and said the union is prepared to hold them accountable.

Counties would also receive more support under the Legislature’s plan. The proposal includes additional funding to help counties handle expanded eligibility checks for residents applying for food assistance and health care benefits, requirements tied to Trump’s federal spending law.

The Legislature also wants to provide $125 million to help counties rebuild indigent care programs for low-income residents, which were largely scaled back after the Affordable Care Act took effect. On homelessness, lawmakers propose $900 million for the state’s homelessness fund, compared with $500 million in Newsom’s plan.

To raise revenue, lawmakers are aligned with Newsom on three tax proposals. One would apply sales tax to most business software, including platforms such as Slack and Microsoft products. Another would limit the amount of tax credits large corporations can claim. A third would extend a tax on Medi-Cal health providers, a tool the state has used to draw down additional federal funding.

Those measures would not need voter approval, but they would require two-thirds support in both houses of the Legislature. The proposals come after California voters rejected many local tax measures in the June primary.

Senate Democrats had also considered a monthly charge on large employers whose workers are enrolled in Medi-Cal, but they have stepped back from that idea. Instead, they are asking the next governor to present “fully viable options” next year.

Lawmakers and Newsom also agree that California should be able to save more money in its rainy day fund, though they have not settled on the details. Under current law, the state is required to make deposits into the reserve, but the fund cannot exceed 10% of general fund tax revenue.

Changing that cap would require voter approval. Legislators are considering whether to place a measure on the November ballot to allow the state to save more for future downturns. They face a June 25 deadline to decide what, if anything, to put before voters.

Original source: CalMatters

The post California Democrats Reach Budget Deal With Spending Above Newsom’s Proposal appeared first on The Hemet & San Jacinto Chronicle.

The California Teachers Association traces its roots to 1863, when state schools chief John Swett organized the California Educational Society with 100 members, all of them men. Over time, that organization grew into the CTA, now a union representing more than 300,000 members and widely viewed as one of Sacramento’s most influential political forces.

Long before California public employees won collective bargaining rights about 50 years ago, the CTA had already built substantial power at the Capitol. Through member dues, the union has spent heavily on campaign contributions, lobbying and ballot measures that affect public education funding.

Its signature victory came in 1988 with the passage of Proposition 98, which created a constitutional funding guarantee for K-12 schools and community colleges. The measure helped offset the erosion of local property tax revenue following Proposition 13, the 1978 initiative that capped property tax increases.

Today, Proposition 98 remains central to every state budget negotiation. Each year, lawmakers and the governor first determine how much money the formula requires for schools and community colleges before dividing the rest of the state’s revenue among other programs. If school funding is reduced, the state is generally required to restore the money later.

But education is no longer the only major budget priority competing for dominance. Medi-Cal, California’s health coverage program for low-income residents, now serves about 14 million people — more than one-third of the state’s population.

California is spending nearly $200 billion on Medi-Cal in the current fiscal year, according to the Legislative Analyst’s Office, and Gov. Gavin Newsom’s proposed 2026-27 budget would increase that amount to $217 billion. Most of the funding comes from the federal government, but the state’s share still totals roughly $50 billion, making Medi-Cal one of California’s largest commitments.

That has created growing tension as federal support declines and state leaders face pressure to fill the gap. Much of that pressure is coming from SEIU-United Healthcare Workers West, a union that represents about 120,000 members and has become one of the CTA’s strongest rivals in Sacramento.

The conflict is rooted in a basic budget reality: more money for schools can mean less flexibility for health care, and vice versa, unless voters or lawmakers approve new taxes.

The rivalry is already visible in this year’s governor’s race. The Service Employees International Union, the parent organization of SEIU-UHW, is supporting former Attorney General Xavier Becerra, a leading Democratic candidate. The CTA is backing billionaire Tom Steyer, who has repeatedly promised to pursue a long-standing teachers union goal: changing Proposition 13 to remove commercial property tax limits, a move that could raise more money for schools.

The unions are also split over budget proposals, including how California pays for preschool. The state Senate’s budget plan would move preschool funding into the Proposition 98 portion of the budget, which could free up money for health care programs. The CTA opposes that approach, viewing it as a diversion of school funding.

Their largest fight, however, is headed for the ballot. SEIU-UHW is sponsoring a measure that would impose a 5% tax on the wealth of California’s roughly 200 billionaires, with nearly all of the revenue dedicated to supporting health care.

CTA leaders oppose being left out of a potential new stream of tax revenue. They also fear the health care measure could weaken support for their own proposed ballot initiative, which would make permanent a surtax on the incomes of California’s highest earners. Voters first approved that tax in 2012, and keeping it in place could preserve as much as $15 billion a year in revenue.

The dispute marks an unusual public divide between labor organizations that often share allies and policy goals. But as California’s budget pressures grow, the state’s two heavyweight unions are increasingly competing for the same dollars — and for the political power to decide where those dollars go.

Original source: CalMatters

The post California’s Major Unions Battle Over Campaign Cash, Political Influence This Election Season appeared first on The Hemet & San Jacinto Chronicle.

An estimated 358,000 children in California currently live with medically complex conditions, a number projected to double over the next decade as medical advances help more children with severe illnesses survive, according to data cited by pediatric nurse practitioner Raji Koppolu, a past president of the National Association of Pediatric Nurse Practitioners.

These children often have chronic diseases, major physical or developmental limitations and recurring hospital stays. Many require care from pediatric subspecialists trained to treat conditions that affect children differently than adults, including illnesses such as sickle cell anemia and cystic fibrosis.

For many families, California Children’s Services serves as a key link to that specialized care. The state program helps connect eligible children with serious medical conditions to pediatric specialists, based on diagnosis and income requirements.

But the network of care is under severe pressure. Nearly 90% of pediatric specialists who participate in California Children’s Services are expected to retire within five years, according to figures cited in the report. Health care advocates warn the impact will be felt most sharply in rural and underserved communities, where families already face long drives and limited options for specialty care.

The shortage is being compounded by financial strain across the health care system. State and federal budget cuts have contributed to layoffs at California hospitals, with more than 400 hospitals reporting 3,400 health care worker layoffs as of March, and additional reductions expected.

Several factors are driving the pediatric specialist shortage. Fewer medical and nursing students are entering pediatric subspecialties, in part because of high graduate school debt and lower lifetime earnings compared with adult medicine specialties. The problem could worsen if the U.S. Department of Education moves forward with excluding nursing and other health professions from eligibility for higher levels of graduate student loans, Koppolu wrote.

At the same time, pediatric specialty care has become increasingly concentrated in larger regional medical centers. Hospital mergers and health system consolidation can make it easier to maintain patient volume and specialized expertise, but they also leave families traveling farther for care. For parents balancing work, transportation barriers and the needs of medically fragile children, those long trips can be difficult or impossible.

Federal workforce programs, including the Rural Health Transformation Program, have been identified as potential tools to recruit and retain pediatric providers in underserved areas. Such funding can also support partnerships among health systems and help test new care models aimed at improving access.

Low reimbursement rates are another challenge. Medi-Cal, California’s Medicaid program, pays significantly less than Medicare for many services. One example cited by children’s health advocates shows that payment for placing a breathing tube in a child’s airway is about 60% lower under Medi-Cal than under Medicare, despite the complexity of the procedure.

Health care advocates say addressing the crisis will require a broader investment in the pediatric workforce. That includes support for programs such as the Golden State Pathways Program, which exposes students to health care careers earlier and helps build interest in pediatric medicine.

Supporters of expanded pediatric care also argue that investment in children’s health should not be viewed as competing with care for adults or seniors. Early treatment of chronic childhood illnesses can improve long-term outcomes and may reduce future pressure on the adult health care system.

Technology could help ease some access problems through telehealth, improved diagnostics and better care coordination. But clinicians caution that virtual tools cannot replace the hands-on expertise, judgment and relationship-based care required for children with complex medical needs.

The central concern for families is whether trained specialists will be available when children need them most. Without action to strengthen the pediatric workforce and protect access to specialty care, advocates warn, California’s most medically vulnerable children could face longer waits, farther travel and fewer treatment options.

Original source: CalMatters

The post California Pediatric Specialist Shortage Grows as Complex Childhood Illnesses Double appeared first on The Hemet & San Jacinto Chronicle.

The spending plan for the 2026-27 fiscal year carries major implications across the state, including for Southern California and the Inland Empire, where many residents rely on Medi-Cal and other health and social service programs. At the center of the negotiations are billions of dollars in disagreements over how much California should spend, what services should be preserved and whether new taxes should be used to help close ongoing budget gaps.

Newsom’s revised budget proposes $334.2 billion for health and human services, with Medi-Cal making up the largest share. About three-quarters of that funding comes from the federal government. But with federal aid reduced and the state still facing a persistent budget deficit, the governor’s proposal would scale back some services.

Those proposed reductions have drawn sharp criticism from advocates for Medi-Cal recipients, who have issued a series of objections since Newsom released his revised spending plan. Medi-Cal serves roughly 15 million low-income Californians.

Legislative leaders in both the Senate and Assembly have put forward budget outlines that would restore many of the services Newsom seeks to reduce or eliminate. The two legislative plans vary in details, but both would increase spending by at least several billion dollars. Neither plan lays out a precise final bottom line.

Lawmakers are also weighing tax increases, particularly those aimed at corporations. Proposals include changing how multinational companies calculate taxable income and imposing a $285 monthly fee on large employers for each worker enrolled in Medi-Cal.

The Senate has proposed adopting that employer fee instead of renewing the state’s long-standing Managed Care Organization tax, which is supported by Newsom and the Assembly. The current tax on health plans generates about $4.5 billion per year and has helped California draw additional federal health care dollars. It is set to expire at the end of the year.

The future of that tax is complicated by new federal limits and by Proposition 35, a 2024 ballot measure approved by California voters that requires proceeds from the tax to be used for medical services rather than non-medical programs.

The California Association of Health Plans opposes renewing the managed care tax, arguing that doing so would conflict with the 2024 ballot measure and increase consumer health care costs by $1.5 billion annually.

The debate reflects the broader challenges facing Newsom and legislative leaders as they decide whether to offset federal funding cuts, restore services targeted for reductions and raise taxes to help pay for it all.

Health and welfare programs are expected to dominate the budget talks because of their size and cost, but they are not the only unresolved issues. The spending plan will be Newsom’s eighth and final budget as governor.

Newsom has said his revised proposal would close the gap between state revenues and spending, a problem that first emerged in 2022 and has continued since. He has argued that the plan would prevent his successor from inheriting a structural deficit when the next governor takes office in January.

Still, many of the tools used to balance the proposal are temporary. They include drawing from emergency reserves, relying on loans outside the main budget framework and using revenue that may be tied to a short-term boost from taxes connected to the artificial intelligence industry.

Legislative Analyst Gabe Petek has cautioned that the state remains financially vulnerable. In a review of Newsom’s budget, Petek wrote that California’s reduced reserves and growing debt leave it poorly positioned if revenues fall below expectations.

As the June 15 deadline approaches, the remaining question is whether state leaders will craft a long-term solution or once again rely on short-term measures to keep the budget in balance.

Original source: CalMatters

The post Medi-Cal Cuts, Tax Hikes Loom as State Lawmakers Negotiate Budget appeared first on The Hemet & San Jacinto Chronicle.

Newsom has promoted his revised budget as a step toward restoring California’s fiscal footing before he leaves office, saying his administration has produced “a balanced budget structurally for 18 months.” The word “structurally” has become central to the debate because California has faced a continuing mismatch between spending commitments and ongoing revenue.

According to Legislative Analyst Gabe Petek, state budgets over the past four years have spent a combined $125 billion more than California actually brought in, after Newsom and the Legislature expanded programs based on revenue projections that proved too optimistic. Budget analysts commonly refer to that kind of ongoing imbalance as a structural deficit.

Newsom’s proposed $349.4 billion budget for the 2026-27 fiscal year, which begins July 1, estimates $226.5 billion in general fund tax revenue. But planned general fund spending would total $246.6 billion, leaving a roughly $20 billion gap. The shortfall is smaller than in some recent years, but it continues to raise questions about whether the state has truly solved its underlying budget problem.

The administration would close the gap through a combination of higher-than-expected short-term revenue, spending reductions, borrowing and other budget maneuvers. Still, the budget documents acknowledge that deficits are expected to continue in future years, though they may be smaller than earlier projections.

Petek has cautioned that the proposal still leaves California “ill-prepared” for even a modest downturn in revenue.

Newsom has defended the plan, saying, “We’re cutting deficits but not cutting corners.” But as the June 15 deadline approaches, advocates for schools, health care and social services are pressing legislators to reject cuts or funding delays affecting programs for low-income residents, children and people with disabilities.

At the Capitol, rallies and press events have become frequent as organizations seek to protect their funding. Education groups are especially critical of Newsom’s proposal because they say it withholds money that schools are entitled to receive under Proposition 98, the constitutional formula that sets minimum funding levels for K-12 schools and community colleges.

Last week, the California School Boards Association joined school unions and other education organizations at a rally outside the Capitol, calling on Newsom and legislators to provide the funding they say schools are owed.

Debra Schade, president of the school boards association, said Proposition 98 is “a matter of law, not a suggestion that can be discarded when it becomes inconvenient for policymakers.”

She criticized the administration for what she described as a third straight year of attempts to alter the minimum school funding guarantee. “Once we open the door to the idea that Proposition 98 can be manipulated whenever the state faces fiscal pressure, we fundamentally weaken the protections voters deliberately put in place for California students,” Schade said.

Health care advocates are also pushing back. Supporters of dental care for children in Medi-Cal released a report warning that more than 1.2 million low-income California children could lose access to dental services if Newsom’s proposed Medi-Cal dental reductions are approved.

Child care and early education advocates have objected as well, saying the governor’s plan would reduce all child care and pre-kindergarten programs by 2% in real spending. They argued that the proposal marks a reversal for a governor who has previously emphasized early childhood programs and family support.

The Legislature’s Democratic supermajority has historically supported many of the programs now at risk, and some lawmakers are expected to be sympathetic to advocates’ concerns. Raising taxes could be one way to avoid deeper reductions, but Newsom has shown little interest in ending his governorship with a major tax increase.

That sets up a difficult choice for Democratic legislators: accept reductions to programs they have championed, or challenge the governor’s budget framework in the final weeks of negotiations. The outcome will determine not only how the state closes its immediate deficit, but how much strain schools, health care providers and social service programs may face in the year ahead.

Original source: CalMatters

The post Newsom’s unbalanced budget faces strong pushback for spending cuts. Will lawmakers back him? appeared first on The Hemet & San Jacinto Chronicle.

    An April report released by the California Health Care Foundation found that Riverside and San Bernardino counties continue to lag slightly behind much of California in overall health outcomes, income levels and access to medical care, even as the region has made progress in expanding physician availability.

    The nonprofit foundation, which focuses on improving healthcare access across California, reported that about four in every 10 Inland Empire residents are insured through Medi-Cal, California’s version of the federal Medicaid program serving low-income and disabled residents.

    That translates to roughly 1.88 million people — a population large enough to cover more than two-thirds of the city of Chicago.

    The report also found that 8% of Inland Empire residents remained uninsured in 2023, compared to the statewide average of 6.4%.

    Healthcare officials say the region’s heavy dependence on Medi-Cal leaves local hospitals and healthcare providers especially vulnerable to federal Medicaid funding reductions approved last year.

    Researchers warned those cuts could threaten recent gains made in improving healthcare access throughout the Inland Empire.

    Health outcomes in the region also continue to trail statewide averages in several categories.

    According to the report, approximately 16% of Inland residents described their health as fair or poor, slightly higher than California’s statewide average of 15.5%.

    The Inland Empire’s infant mortality rate was also higher than the state average, with 5 infant deaths per 1,000 live births compared to California’s rate of 4.1 per 1,000.

    Economic disparities remain another challenge tied closely to healthcare access. The report found the Inland Empire’s median household income sits roughly $10,000 below the statewide average, while fewer local households earn more than $100,000 annually compared to the rest of California.

    One area showing improvement is physician availability.

    Between 2015 and 2023, the number of primary care doctors per 100,000 Inland residents increased by 20%, while specialty physician numbers climbed 38%.

    Even with that growth, the Inland Empire still falls well short of the statewide average when it comes to physician availability. The region currently has about 229 doctors per 100,000 residents, compared to California’s average of 358 physicians per 100,000 people.

    The report also highlighted gaps in representation within the medical field itself. While Latinos make up more than half of the population in Riverside and San Bernardino counties, only about 10% of doctors practicing in the Inland Empire are Latino.

    UC Riverside School of Medicine has been working to address the physician shortage since opening in 2013. School officials say the strategy has focused heavily on recruiting students with local ties in hopes they will remain in the region long term.

    Dr. Daniel Teraguchi, executive associate dean for student affairs at the medical school, said 80% of incoming students have connections to the Inland Empire. He added that 51% of students who match with residency programs are staying in the region to complete their training.

    “Because they’re training here, it’s likely those future doctors will stay in the Inland Empire,” Teraguchi said.

    The report also examined hospitals throughout the region. Researchers found the Inland Empire’s healthcare market remains relatively competitive compared to other parts of California, with roughly 40 hospitals serving the two-county area.

    However, the region still has fewer hospital beds available than the statewide average. The Inland Empire averages about 173 beds per 100,000 residents, compared to California’s statewide average of 198 beds per 100,000.

    Researchers noted that while many hospitals remain financially stable, several are facing mounting economic pressure and have already begun reducing services, including maternity care programs.

    Public hospitals continue to play a major role in the region’s healthcare safety net, particularly Riverside University Health System Medical Center in Moreno Valley and Arrowhead Regional Medical Center in Colton.

    Michelle Decker, president and CEO of the Inland Empire Community Foundation, said the report accurately reflects both the progress and ongoing concerns facing healthcare providers in the region.

    “It captures how current federal policies clearly threaten those gains without providing any new ideas or money to improve the health of IE residents,” Decker said in an email statement.

    Decker called for increased public investment, stronger collaboration and innovative partnerships between hospitals, businesses, nonprofits, governments and community organizations.

    “We won’t weather this moment if we work in silos, and we need innovation to come from all corners,” she said.

    She warned that without action, Inland Empire residents could face setbacks in healthcare access at a time when many families are already struggling financially.

    “It’s clear from the data that the people who live in the IE cannot afford to see a steep slide backwards in health care,” Decker said.

The post New Report Highlights Healthcare Challenges Facing Inland Empire Residents appeared first on The Hemet & San Jacinto Chronicle.

Many Californians on Medicaid, better known in the state as Medi-Cal, already struggle to access timely and quality care. Now, experts warn that millions more could lose coverage under H.R. 1, which makes sweeping changes to the country’s safety net programs.

Anticipating the fallout, a group of health foundations has formed the Future of Medi-Cal Commission. Its charge: creating a 10-year blueprint for a program that covers more than 14 million low-income residents and pays for key services from childbirth to nursing home care.

The commission’s co-chairs are Gov. Gavin Newsom’s former chief of staff, Ann O’Leary, and his former Health and Human Services secretary, Dr. Mark Ghaly, who led the state’s response to the COVID-19 pandemic.

The 29-member commission will begin meetings in January and will deliver recommendations in early 2027.

Ghaly discussed the commission and the challenges ahead. “Nothing forces you to think about these things more than the threat to your current existence,” Ghaly said.

This conversation has been edited for length and clarity.

What’s the origin story for this commission? Who decided it needs to exist and why?

The health foundations collectively that focus on programs like Medicaid and think about issues of equity … came together and said, “we’ve got to react and be prepared for the immediate shifts.” This is a forcing function moment — and a state like California, for its millions of people who benefit from Medi-Cal, but also the nation, have got to drive some process to consider: What does this all mean for the mission of supporting low-income people to be healthy and well?

Obviously H.R. 1 makes a lot of changes. What do you see as the biggest challenge for Medi-Cal right now?

There’s this big concern that a lot of people who have become confident and comfortable in their care may lose it, either through eligibility or if there are — God forbid — service cuts. Those are the things that I think are the “now” worries. The future worries are a little bit different. They include some of the things I just mentioned, but it’s also about sustainability and the growth and the cost of the program, and how we are sure we’re doing the right things that actually drive health outcomes to be better.

Speaking of costs, the Medi-Cal program has grown extensively over the last several years — some people say it’s grown too much, and earlier this year, the program went over budget. At which point does the program become too big?

Look, Medi-Cal has become a true health program, not just a healthcare program. [What that means is], it’s really thinking about all the things that go into creating healthy individuals, healthy families, healthy communities, and, by extension, a healthier state.

Has it grown too big? I think the piece of that that I appreciate and think is very important to dig into, is, are we doing all the things that matter? It’s great that we’re doing things to support health broadly, but are all the things that we’re paying for and creating the workforce for the things that make sense to do? I think that’s what is going to be a very interesting piece [for] this commission to dig into.

The state is freezing enrollment and cutting benefits already because of budget pressures. Are more service cuts and kicking people off the program in order to respond to the federal shifts inevitable?

It’s a hard question to respond to without the knowledge of what the other pressures are that the state’s going to face. You never want to say never, but I know this governor, I know the team there. They’re not going to want to make those kinds of cuts and decisions. But at the end of the day, the state has a responsibility with its budget to make sure it’s well and balanced.

What do you expect to happen to the commission’s recommendations?

I would like to think that what the commission writes and ends up with is something that is usable by policymakers.

What I like about the commission’s makeup, in part, is that it is a lot of operators. It’s a lot of people who can understand how the high-level idea might actually get implemented on the ground and through the different channels and levels of bureaucracy, which is a very big plus.

By the time the commission delivers its report, California will have a new governor. What should the next governor be thinking about and saying about these problems?

I would love our candidates to be really hungry to understand what they might come in and expect to do to support improving, modernizing and ensuring that California’s flagship Medi-Cal program is maintained and supported.

If you find a somewhat sophisticated candidate, and then elected governor, in the healthcare space, they’re going to see how it’s not that all roads lead to Medi-Cal, but Medi-Cal is a major freeway in the healthcare environment, and it is the one that she or he has the choice to really influence and control.

I’ll just add one other thing. Healthcare is a huge piece of the California economy. And I don’t mean just Medicaid; I mean broadly. Most every person in California thinks about, “How do I secure and preserve access to healthcare and live in a healthy community?” I think those are important priorities.

The post What’s next for California healthcare? appeared first on The Hemet & San Jacinto Chronicle.