It’s budget season in Sacramento, and chaos is sure to arise. Gov. Gavin Newsom and Democratic lawmakers are now paying the price for a colossal misstep two years ago.
They pieced together what they call a “post-pandemic middle-class tax refund.” In fact, low-income earners do much better than the middle class. And it’s not a refund at all. This is a direct giveaway of general fund cash.
The tag is $9.5 billion. Don’t Sacramento politicians wish they had that money now as they face a projected $45 billion budget deficit! If they were currently stored in protected areas, they could avoid significant cuts to some of the good state programs Californians use.
But budget experts predict a $100 billion surplus in 2022. It was an election year. Newsom survived a recall attempt last year and is now running for a second term. Most lawmakers are also preparing to run for re-election.
So throwing nearly $10 billion out of the Capitol windows at people who really don’t care if they get any money seems like a great idea.
The whole thing is confusing—even a little fishy. The state should simply send out checks, just as it does with income tax overpayments. Instead, it gives recipients the option to sign up for direct deposit into their bank account. Or they can receive a prepaid debit card from a private contractor. To many people, this card looks like a lure or a scam. A lot of cards were thrown away.
The Times’ Jon Healey recently reported on evidence of flaws in the money distribution system, writing that 624,000 Californians still haven’t gotten their free cash. They haven’t activated their card yet.
Grant amounts range from $200 for an individual to $1,050 for a couple, depending on their income. Individuals making up to $250,000 and couples making up to $500,000 will receive something.
I got $200, which I didn’t need at all. Friends who made more also received cards – and felt a little embarrassed about it.
I would rather the state spend the windfall on necessary infrastructure such as water supplies, wildfire prevention, alternative energy and homeless shelters. Or at least put it into a savings account.
Now, both the governor and the Legislature are proposing to increase needed savings. good idea. But that’s not the case this year.
The state budget has become like California’s weather: a few years of excess rainfall, followed by a severe drought.
At the Capitol, there were fiscal boom and bust periods. The situation is exacerbated by the state’s overdependence on the rich’s unstable capital gains. Politicians have not mustered the courage to address the problem by updating the tax system. But it’s an old song of mine.
For now, Newsom and legislative leaders are working behind closed doors to reach an agreement on a budget that must be balanced. At least on paper. They are working on a revised $288 billion proposal the governor submitted to the Legislature last month.
The deadline for legislation to pass the budget is June 15. As of this writing, they are no closer to reaching a final deal with the governor.
As a result, what is passed before the deadline is likely to be a budget in name only – an empty spending plan lacking major details.
The specifics are likely to be revealed in dozens of so-called “trailer bills” that will be passed quickly before the budget takes effect on July 1, without much opportunity for public scrutiny.
If you care about transparency, this is not the first good way for government to handle legislative matters. But that’s how the Legislature works.
A Democratic-dominated Legislature that loves spending and hates cuts needs to make tough choices.
According to Times budget writer Taryn Luna, here are two main issues:
Medi-Cal providers have higher rates:
The governor and Legislature agreed last year to increase reimbursement rates for doctors and other providers who provide Medi-Cal care to the poor. Now, Newsom wants to take away $6.7 billion to earmark for multi-year interest rate hikes.
bad idea. For years, many doctors have turned away patients from Medi-Cal, claiming they were losing money due to stingy reimbursement. Meanwhile, Sacramento continues to expand the list of people eligible for Medi-Cal. In fact, the state plans to spend $3.2 billion in the next fiscal year to expand Medi-Cal to undocumented immigrants ages 26 to 49.
There is no point in expanding care if doctors refuse to treat patients.
Minimum wage increase for health workers:
Newsom signed a bill last year that would increase the minimum wage for health care workers to $25 an hour, effective now. But the governor stressed to labor negotiators that he would “absolutely not” allow a rate increase to take effect if the state faced a huge deficit.
As a result, the governor removed $2 billion in funding for rate increases from his May budget revision. Upset Democratic lawmakers sided with their patron unions, claiming Newsom had exaggerated the costs. They asked for at least $100 million.
OK Maybe $100 million. Definitely not $2 billion.
There are more budget disagreements — such as homeless housing, street cleaning after homeless furloughs, business tax credits and jail closures.
One mistake politicians want to avoid is simply kicking the can down the road – using mostly accounting gimmicks to create a “balanced” budget. This will certainly lead to more deficits next year.
