Congress Poised To Approve Children’s Health Coverage Bill

January 30, 2009

After more than one year of waiting – and two vetoes by former President Bush – Congress is poised to approve a bill that will help California significantly increase the number of children with health coverage. The House and Senate have approved bills to renew, or “reauthorize,” the State Children’s Health Insurance Program (SCHIP) with a substantial funding increase. The differences between the bills are minor, so the final SCHIP bill should be ready for President Obama’s signature in February.

SCHIP reauthorization comes at a critical time for California, which uses these federal dollars – along with state funds – to provide health coverage for nearly 900,000 children through the Healthy Families Program, as well as for some children in Medi-Cal. Federal funding has not kept pace with Healthy Families enrollment and rising health care costs. In December, the state was on the verge of turning eligible kids away from Healthy Families for the first time in the program’s history, until the state First 5 Commission and dozens of county First 5 commissions came to the rescue with nearly $17 million to fend off an enrollment freeze. Additional SCHIP funds will help California reduce the number of uninsured children over the next few years. In 2007, more than half of uninsured kids in the state were eligible for Healthy Families or Medi-Cal, but not enrolled in either program.

CA Uninsured Children

One key provision in both bills would – for the first time – let states use  federal dollars to cover legal immigrant children and pregnant women during their first five years in the US. California already uses state funds to cover these groups through Healthy Families and Medi-Cal, so this provision would cut the state’s costs by tens of millions of dollars each year as the state grapples with its perpetual budget crisis.

– Scott Graves

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Posted by cbporg

A Proposed Hard Cap on Spending Is Misguided

January 28, 2009

We’ve been swamped lately at the CBP with budget-related work. That’s why we’re just now getting around to posting this op-ed written by CBP Executive Director Jean Ross that appeared in the Los Angeles Times yesterday. In the op-ed, Jean examines a Republican proposal to place a hard spending cap on the ballot in exchange for their support of tax increases. She writes that “far from being a cure-all, a hard spending cap would place an arbitrary stranglehold on the state’s ability to improve its schools, rebuild its infrastructure, care for its senior population and respond nimbly to future challenges. Disguised as a solution, this cap could quickly become one of California’s most serious budgetary problems.”

We know that a hard spending cap is being bandied about in current budget negotiations. Whether it might take the exact form proposed last year in ACA 19 (Villines) is unclear. Regardless, the problems that Jean outlines in the op-ed still stand. Hard spending caps severely restrict the state’s ability to respond to future challenges, and they’re no substitute for the hard choices lawmakers must make about where to make cuts and where to increase revenues this year.

– Lisa Gardiner

1 Comment | State Budget | Permalink
Posted by cbporg

Sowing the Seeds of Future Budget Problems

January 26, 2009

Press reports and the rumor mill suggest that lawmakers may be close to reaching agreement on a deal that attempts to address most, if not all, of the state’s $40 billion budget gap. A reasonable voter might wonder why, in the face of an impending cash flow crisis, reaching an agreement is so difficult. One factor stands out above all others – California is the only state in the nation to require more than a majority of its legislature to approve a budget under any circumstance and any state tax increase.

CBB_supermap_012609

California’s double supermajority vote requirements have often led lawmakers to enact “solutions” to one budget crisis that lead to more severe problems in the future. Take, for example, provisions in the 2008-09 budget agreement that would raise a total of $2.4 billion in 2008-09 and 2009-10 and then result in a $5.4 billion total revenue loss between 2010-11 and 2015-16, with losses of approximately $1.0 billion per year thereafter. The big losses will kick in at a time when long-term budget forecasts issued by both the Legislative Analyst and the Governor’s Department of Finance estimate that the state will still face substantial budget shortfalls.

Despite projections of continued red ink, some reports suggest that an impending budget deal may include some type of a tax cut in the name of “economic stimulus.” Economic modeling suggests that tax cuts are an ineffective means of stimulating the economy. While their benefit to the economy is uncertain, at best, we do know that they will sow the seeds of larger, more challenging future budget shortfalls.

– Jean Ross

2 Comments | State Budget | Permalink
Posted by cbporg

California Stands To Receive Nearly $20 Billion Under House Economic Recovery Plan

January 22, 2009

Our colleagues at the Center on Budget and Policy Priorities (CBPP) have released preliminary analyses of the state-by-state impact of the House Economic Recovery Plan. The CBPP estimates that California would receive $11.1 billion from provisions that would increase the federal government’s share of Medicaid spending (Medi-Cal in California) in the current and next two federal fiscal years.  The state would also receive $7.8 billion from a new State Fiscal Stabilization Fund in the current and next federal fiscal years. Rough calculations suggest that these two provisions could bring $11.2 billion federal dollars to the state’s coffers over the next 15 months.

Other provisions of the Economic Recovery Plan would boost funding for education, unemployment insurance, child care, employment training and related services, food stamps, and SSI. 

 –Jean Ross

2 Comments | Federal Budget & Taxes, State Budget | Permalink
Posted by cbporg

Limiting California’s Future – An Elaboration

January 22, 2009
We received a number of good questions on yesterday’s post. Explaining the impact of a hard budget cap is a tough thing to do in a blog post! The $31.2 billion figure is the difference between budgeted 2008-09 General Fund spending and the level of spending that would be allowed under a cap similar to that specified in ACA 19 (Villines) of 2008. In other words, if voters had approved such a cap beginning in 1995-96, total state spending would be limited to $39.7 billion less than that authorized by the 2008-09 budget and the General Fund’s share of the necessary reductions would be $31.2 billion.

We look to the past to estimate the impact of a cap because doing so gives us hard figures for population and personal income growth and inflation. The problem with a hard cap is that sets an arbitrary limit, but doesn’t tell you where or what to cut to bring state spending under the limit.  The spending cap proposed by Republican lawmakers is also incompatible with the state’s school spending guarantee, but that’s a subject for another blog post.

– Jean Ross

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Posted by cbporg

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