Governor Gavin Newsom talks housing in his new budget plan
California Gov. Gavin Newsom’s first budget won’t look exactly like he wanted, but a deal lawmakers released late Sunday largely fulfills the objectives he set six months ago when he first outlined his spending plan.
Lawmakers want to use an “extraordinary” state budget surplus to expand health care options for undocumented people while stockpiling billions of dollars in reserves in anticipation of an economic downturn, according to documents the Legislature’s Budget Conference Committee released.
The agreement marks the end of months of negotiations between Newsom and the Legislature. Lawmakers face a June 15 deadline to pass the budget, which will take effect in July.
The agreement includes funding to let undocumented young adults under age 26 enroll in Medi-Cal, the state’s health insurance program for low-income Californians. But it doesn’t extend that eligibility to undocumented seniors, as state senators had proposed.
The expansion will take effect Jan. 1, 2020 and cost $98 million in the upcoming fiscal year. It will make California the first state to allow undocumented adults to sign up for state-funded health coverage.
The budget includes a fine on people who don’t buy health insurance known as an individual mandate. The fines were initially implemented as part of the federal Affordable Care Act law known as Obamacare, but Republicans acted in 2017 to roll them back. Newsom and legislative leaders say re-imposing the penalty at the state level will shore up the state’s health insurance marketplace and keep premiums from rising dramatically.
Revenue from the mandate will fund insurance premium subsidies for middle income people. The budget agreement also includes an additional $450 million over three years to fund insurance subsidies after some lawmakers argued mandate revenue alone wouldn’t make health insurance affordable.
Anthony Wright, executive director of advocacy group Health Access, said the budget agreement will help hundreds of thousands of Californians access health care.
Wright applauded the Legislature for securing additional funding for insurance subsidies, which the governor’s office had initially resisted.
“While it’s not all we sought, it will provide a real tangible difference for people, especially for those around and below poverty and for middle income families who don’t get any help under the federal law,” he said.
Cynthia Buiza, executive director of the California Immigrant Policy Center, praised the deal for expanding state health care to undocumented young adults, but faulted the compromise for not including two other priorities for immigrant advocates. They wanted Newsom to offer health care for undocumented seniors and to extend the earned income tax credit to low-income undocumented immigrants.
“For California’s immigrant communities, today’s budget deal is bittersweet,” Buiza said in a statement “The exclusion of undocumented elders from the same health care their U.S. citizen neighbors are eligible for means beloved community members will suffer and die from treatable conditions. And the exclusion of many immigrants from the Earned Income Tax Credit will perpetuate the crisis of economic inequality in our state.”
Newsom in May proposed a $213 billion state budget. The budget committee on Sunday did not disclose the total cost of the agreement it’s recommending.
“The budget agreement we’re finalizing tonight builds on the strong budget proposal of the governor, while adding significant legislative priorities,” said Sen. Holly Mitchell, D-Los Angeles, who leads the joint legislative budget committee. “The budget agreement maintains our agreement to responsible budgeting, which includes the largest reserves in history – over $20 billion – finally paying off the remaining wall of debt from the Great Recession and making supplemental pension payments.”
Newsom won’t get the so-called water tax he proposed in January to pay for water system improvements for communities with unhealthy drinking water sources. But, lawmakers agreed to pay for the projects, anyway.
The compromise includes $130 million to start the work next year and commits to more funding through 2030.
“We are thrilled that the Legislature and Governor Newsom have committed stable funding to ensure that all Californians have access to safe and affordable drinking water this year and in the years to come,” a group of advocates known as the Safe Drinking Water Coalition said in a written statement.
The budget agreement includes billions of dollars supplemental pension payments to ease financial pressure on California school districts, which have been adjusting to higher rates from the California State Teachers’ Retirement System.
Newsom in January had proposed spending $7.8 billion beyond what was required by law on CalSTRS and the California Public Employees’ Retirement System. The budget compromise shows lawmakers want to spend even more.
The Legislative Analyst’s Office in April referred the state’s surplus as “extraordinary moment” that lawmakers could use to prepare for a recession. It urged more savings than Newsom recommended.
Democrats have supermajorities in both houses of the Legislature, so they don’t need Republican support to pass a budget.
Republicans on the budget committee voted against a number of spending proposals Sunday night, voicing worries about long-term debt.
“I’ve been voting no or abstaining on a lot of spending opportunities,” Sen. John Moorlach, R-Costa Mesa, said. “Some people think the glass is half full, I’m looking at it as half empty, so that will maybe explain my caution on a lot of these spending votes tonight.”