Capitol Alert

Working poor, doctors score gains under California budget deal

Jerry Brown says a recession is inevitable

Gov. Jerry Brown on May 11, 2017 released his revised budget plan, noting that an economic downturn is coming.
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Gov. Jerry Brown on May 11, 2017 released his revised budget plan, noting that an economic downturn is coming.

Gov. Jerry Brown and Democratic legislative leaders announced Tuesday a deal on a $183.2 billion budget that expands tax credits for working families, accelerates spending for roads and mass transit and uses some new tobacco tax revenue to raise Medi-Cal provider rates for physicians and other health professionals.

The announcement came several days after the Legislature’s budget-writing committee advanced a spending plan for the year beginning July 1, with a handful of final details to work out. Lawmakers will vote on the package Thursday, the constitutional deadline to pass a budget.

Talks on other budget-related issues continue. This week’s package includes no proposal to extend the state’s cap-and-trade program beyond 2020, a centerpiece of the Brown administration’s efforts to fight global climate change in California. Brown wants any extension measure to pass with a two-thirds vote.

“This budget keeps California on a sound fiscal path and continues to support struggling families and make investments in our schools. We’ve come together on this balanced and progressive budget and I’m confident that we can do the same to extend our critical cap-and-trade program,” Brown said in a statement.

Assemblyman Jay Obernolte, the top Republican on the Assembly Budget Committee, said the main budget bill properly limits growth in general fund spending to about 3 percent. The plan, though, misses a chance to address the state’s lack of affordable housing, he added.

Echoing other Republican lawmakers, Obernolte criticized a budget-related measure that would rewrite recall election rules. The legislation would help the prospects of a recall target, state Sen. Josh Newman, D-Fullerton.

“It’s a complete violation of our budgeting process,” said Obernolte, R-Big Bear Lake.

How to spend the more than $1.2 billion in tobacco taxes was among the last outstanding issues for a spending agreement.

The tobacco money came under heavy lobbying as Brown and lawmakers worked toward a resolution. Under the deal, doctors, dentists and other health professionals who provide publicly funded care for the poor would receive $546 million in supplemental payments next year. And depending on the state’s fiscal condition, lawmakers could increase the supplemental provider payments to $800 million in the budget year beginning July 1, 2018, the last year of the two-year pact.

The extra money will only materialize if the state gets federal approval and does not prompt a comparable reduction in federal Medi-Cal funding.

“We’re all clear that we are attempting to legislate and guarantee access to healthcare services to California residents in a national time ... of a federal administration that doesn’t support that concept generally,” said state Sen. Holly Mitchell, D-Los Angeles. “That’s not new news to us, but that doesn’t prohibit us from doing what we know is right.”

Brown and lawmakers highlighted the expansion of the state’s earned-income tax credit as a way to fight poverty. It expands the credit to self-employed income and raises the income threshold to $22,300, which officials say will allow more than 1 million households to claim the credit, more than double the nearly 400,000 households that claimed the credit in 2015.

“We had a framework really of making sure that we were fighting poverty and making sure we were fighting for the middle class,” Assembly Budget Committee Chairman Phil Ting, D-San Francisco, told reporters on Tuesday. “One of our biggest achievements in this year’s budget was around the earned income tax credit.”

In addition, the budget reflects more than $100 million and major policy changes to begin carrying out last year’s ballot measure legalizing the recreational use of marijuana.

All of the bills to be considered Thursday must have been in print and available for public review for 72 hours.

Some significant budget issues have reached agreement but will not be considered this week. Besides the main budget bill, there are more than a dozen related bills that change policy on a range of spending issues, from health care to state building construction.

Christopher Cadelago: 916-326-5538, @ccadelago