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Despite speculation about bold moves—in a far-left direction, even for this blue state—Gov. Gavin Newsom and legislative Democrats actually landed a budget Thursday that’s surgical about new taxing and spending while still keeping promises to help poor Californians and working families.

Under the $214.8 billion spending plan, the state inched closer to universal health coverage, expanding Medi-Cal to all low-income young adults regardless of immigration status. State lawmakers also charted a course to increase tax credits to the working poor and boost subsidies to middle-income Californians to buy health coverage. There were significant investments in early education and housing, while a portion of the surplus was diverted to pay down pension liabilities.

While Democrats began the year with a surplus of ideas for taxing Californians, only a few strategic levies survived the negotiation process, specifically a fine on individuals who don’t have health insurance under a state mandate. There’s even a little tax relief: Parents, for instance, will get a temporary tax exemption on diapers.

One hitch? The devil is in the details, some which have yet to be worked out. Though Democrats met their deadline for a balanced spending plan, most of the underlying policy to enact the budget wasn’t hashed out—and may not be for weeks. Call it a learning curve: This was the new governor’s first time negotiating with seasoned legislative leaders who know how to count votes. Look for more action in coming trailer bills.

Here’s what you need to know about California’s new budget—including maybe, just maybe, the first steps toward the establishment of a four-year college in the Coachella Valley.

Yes to Health Care for Undocumented Young Adults

The Legislature agreed to the governor’s plan to expand Medi-Cal, the state’s Medicaid program for low-income people, to young adults ages 19-25. It’s a step toward offering free health care to all undocumented adults since the state already makes Medi-Cal available to children regardless of immigration status.

The Senate had proposed going further by offering Medi-Cal to undocumented seniors 65 and older. However, none of the leaders backed offering health care to all low-income immigrants.

The state expects an estimated 90,000 young adults could gain coverage when the benefit begins next year. Already, 76,000 have registered for a limited version of Medi-Cal that covers emergency services and prenatal care available to low-income people regardless of immigration status. The price tag for this expansion? About $98 million a year.

It’s worth noting the state also affirmed its commitment to restoring optional Medi-Cal benefits. During the recession, coverage for audiology, optical, podiatry, speech therapy and incontinence creams had been taken away.

Obamacare Lives: A $695 State Mandate to Carry Health Coverage

Starting next year, California will join New Jersey, Vermont and the District of Columbia in requiring residents carry health coverage or face a $695 state penalty—a fine that will go up each year with inflation.

The state individual mandate aims to replace the federal one that Republicans repealed in their effort to dismantle the Affordable Care Act. The administration says California needs to act, because without a mandate, the number of Californians without coverage—10.4 percent in 2016—will go back up. Separately, a study conducted by the University of California estimated the uninsurance rate will rise to 12.9% by 2023, or 4.4 million people, without state action.

Money raised from the penalties, about $450 million over three years, will be used to give bigger subsidies to those who purchase private insurance through the state’s health coverage exchange, Covered California.

Newsom and lawmakers hope to expand assistance to 190,000 middle-income Californians making between $48,000 to $72,000 a year, according to Health Access California, a health advocacy group.

Fear of Recall = Not Many New Taxes

The budget includes a plan to impose a fee—that still needs to be voted on—of no more than 80 cents a month on each telephone line to help digitize the state’s 911 system, which is still analog. The next-generation system would improve call delivery, better location data and incoming text capability.

Other than that and the health-care mandate, lawmakers opted against most of the new taxes proposed early in the session. In fact, California parents and women will get a sales tax exemption on diapers and menstrual products (though only for two years).

Notably rejected, given the state’s current $21.5 billion surplus, was Newsom’s push for a 95-cent tax on most residential water bills to fund-clean-drinking water initiatives in the Central Valley. Instead, the Legislature worked out a deal to clean up toxic water by diverting money generated from big polluters under the state’s cap-and-trade program.

Some environmental groups questioned using clean air money to pay for drinking water, but supporters reasoned that water is being contaminated with arsenic and other toxic chemicals from the heavy use of fertilizers, so it makes sense to draw the $100 million for cleanup from the agriculture industry’s portion of the greenhouse gas fund.

One issue that won’t be resolved this week is whether California will conform its tax code to match federal changes made by Republicans in 2017. Newsom is relying on the projected $1.7 billion increase in net revenue from that to expand the state’s earned income tax credit, the centerpiece of his anti-poverty agenda.

Assembly Democrats in swing districts are skittish about limiting deductions and losses that can be claimed by some businesses. They know the fate of former Sen. Josh Newman, who was recalled from his Orange County seat after voting to raise California’s gas tax. Tax conformity requires a two-thirds vote in the Legislature to pass, so the pressure is on.

Paying Debt and Rainy-Day Saving

Lawmakers embraced the governor’s proposal to use some of the surplus to make extra pension payments, a step Newsom says is necessary to tame the state’s $256 billion retirement liability for state workers and teachers.

The Legislature approved supplemental payments of $3 billion to the California Public Employees’ Retirement System and $1.1 billion to the California State Teachers’ Retirement System for the state’s portion of unfunded liability.

To relieve school districts across the state, the Legislature will contribute a total of $3.15 billion toward paying down their liabilities and reducing their payroll contribution rates. One difference is where it will go.

Previously, Newsom had all the extra payments going to the teachers' pension fund—a reaction, in part, to teachers strikes that erupted as he took office. Now a portion of that money will be doled out to CalPERS. The change was made in recognition that while teachers are members of CalSTRS, many other school employees from janitors to bus drivers belong in the state’s other public-employee pension fund.

Besides paying down California’s “wall of debt,” as former Gov. Jerry Brown called it, the state is shoring up for a downturn—or in Newsom-speak, “building budget resiliency.” The new budget carries a roughly $20 billion reserve from several rainy-day funds. This amount, while hefty, would be easily wiped away in a downturn. According to the Legislative Analyst’s Office, the state would need as much as $40 billion to cover the budget in a moderate recession.

Big Spending on Housing

With new commitments topping $2 billion, the budget represents the most important action the governor has taken so far on housing and homelessness. The lion’s share will target the state’s homeless population, including $650 million in grants for cities and counties to build and maintain emergency shelters, and $100 million for wrap-around care for the state’s most vulnerable residents. Another $500 million will go toward quintupling the size of the state’s affordable housing financing fund, plus hundreds of millions earmarked for cities to update their often outdated housing plans.

While lawmakers and Newsom have agreed to cut big checks, it’s not clear who’ll get the money, and with what strings attached. Big-city mayors and lawmakers want homelessness grants directed towards the state’s largest 13 cities, while Newsom wants to spread out the money to include counties.

Newsom also wants to deny transportation funds to cities not building enough housing. As of Thursday, lawmakers were still negotiating a scaled-back version of the proposal. Another Newsom proposal that speeds construction of homeless shelters by sidestepping environmental laws also remains unresolved.

Lending a Hand to Working Families

Expanding California’s earned income tax credit has quickly become one of Newsom’s signature anti-poverty programs, because it gives a cost-of-living refund to low-income working families. Lawmakers are poised to triple the program from $400 million to $1.2 billion to provide a $1,000 refund for families with children under 6 and expand income eligibility from $24,950 to $30,000.

Anti-poverty advocates had wanted Newsom to include undocumented workers who file with individual taxpayer identification numbers instead of Social Security numbers. That proposal did not make the final version of the budget. Still, the administration estimates the current expansion will increase the number of beneficiaries from 2 million to 3 million households.

The budget also will make it easier for low-income families with children to qualify for assistance, increasing the CalWORKs asset limit to $10,000 and the motor vehicle exemption to $25,000—changes that will allow people to save and hang on to cars that can get them to work.

And parents of all incomes will get a longer paid family leave to care for new babies—eight weeks, up from the current six weeks, starting in July of next year. The goal will be to boost the benefit to 90 percent of most wages, up from the current maximum of 70 percent.

The K-14 Kids Did All Right

As required by law, the lion’s share of the budget goes to public schools, with nearly $102 billion in state money to be pumped into California classrooms and community colleges, plus another $389 million in a special reserve fund for schools. Though the figure is an all-time high, California is still viewed as lagging in per-pupil spending, in part because of the high cost of living.

Democrats are also demanding more stringent oversight of charter schools, which can operate like private schools, tend to be non-union and have proliferated in big cities such as Oakland and Los Angeles. Newsom proposed prohibiting charter schools from blocking or disenrolling special-education students who require more support for disabilities. Lawmakers readily embraced that change.

The budget includes $300 million to build more kindergarten classrooms in an effort to boost full-day kindergarten programs. Newsom had initially proposed $750 million but that was reduced after a study found most part-day kindergarten programs are in wealthier communities.

After-school programs will get a $50 million boost over the $600 million or so the state is currently spending. The money will help cover the cost of minimum wage increases enacted during Brown’s tenure.

So Did the Little Ones

In emphasizing early education, Newsom and lawmakers agreed to expand day care and preschool slots by the thousands while investing in training for child care providers.

Newsom gets $50 million in seed money to start child savings accounts for college and post-secondary education. He initially asked that all of it go toward pilot projects with First 5 California and local governments, but the Legislature is designating $25 million to that. The other $25 million will create a state program with the Scholarshare program in the Treasurer’s Office.

More Free College and Help for Student Parents

Newsom and legislators delivered on a $45 million promise to fund a second year of tuition-free community college for first-time, full-time students at campuses participating in the state’s College Promise program.

Other big winners include students with children, who will be eligible to receive grants of up to $6,000 to help cover their families’ living expenses. The budget boosts by about 15,000 the number of competitive Cal Grants—a significant jump, but far less than the 400,000 qualified students who applied for the state scholarships last year and didn’t receive them.

The University of California and California State University systems will receive money to increase enrollment, and waive tuition during the summer to help low-income students graduate faster. Lawmakers also set aside funds for campuses to combat hunger and homelessness, strengthen veterans resource centers, and provide more mental health counseling. A center at the University of California San Francisco is getting a $3.5 million earmark for dyslexia screening and early intervention.

Backers of the state’s controversial new online community college fended off an effort to slash the college’s funding, clearing the way to enroll its first class this fall. And CSU will get $4 million to study five possible locations for a new campus: Stockton, Chula Vista, San Mateo, Concord and Palm Desert.

Lots for Police Training; a Little for Police Records

Reflecting the Legislature’s focus this year on reducing police shootings, the budget includes $20 million to train police officers on de-escalation tactics, and how and when to use force. Outside the budget, bills to set a tougher standard for police to use deadly force and require more officer training are advancing through the Legislature, reflecting a compromise between civil rights advocates and law enforcement groups.

Attorney General Xavier Becerra’s office will get $155,000 to implement the new state law he’d been resisting: making law-enforcement misconduct records public. Becerra will also have to report to the Legislature on how many requests his office processes, and how much time is spent on that. A judge ruled in May that Becerra must produce the records; previously he had said he would not release them until the courts clarified whether he had to.

Powering Down to Cope With Wildfires

Besides beefing up the state’s firefighting capability and disaster preparedness, California will add powering down to its to-do list for coping with climate change-driven wildfires.

The budget doles out $75 million to state and local agencies whenever investor-owned utilities decide to shut off electricity during red flag weather warnings. One note: The Assembly added language to track how the money is used.

CALmatters reporters Matt Levin, Felicia Mello and Laurel Rosenhall contributed to this report. CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Politics

On this week's Game of Thrones-free weekly Independent comics page: Jen Sorensen bemoans the New York Post's crappy brand of journalism; (Th)ink mourns the terrible Notre Dame fire; This Modern World ponders the Trump administration's pretzel logic; Apoca Clips watches Li'l Trumpy applaud Stephen Miller; and Red Meat wonders why Dad is so darned weird.

Published in Comics

California is once again defending the Affordable Care Act, leading a coalition of Democratic states against a small army of Republican lawmakers seeking to undo the Obama administration’s signature health-care law.

On Jan. 3, state Attorney General Xavier Becerra and 16 other attorneys general appealed last month’s ruling by a federal judge in Texas that declared the entirety of the Affordable Care Act, also known as Obamacare, unconstitutional.

“I’ve seen how the ACA has transformed lives, and I’ve seen it up close,” Becerra said in a phone call with the press this morning. “That is why so many of us are committed to defending the ACA.”

Many legal experts, both liberal and conservative, have predicted that the Texas ruling will be overturned by a higher court. Last month, Judge Reed O’Connor of Fort Worth ruled on a lawsuit filed against the federal government by top law-enforcement officers and other elected leaders of 20 states, including Texas and Florida. That legal coalition of red states argued that the individual mandate, which requires people to either buy insurance or pay a fee, was unconstitutional. The Texas judge agreed—and argued that the healthcare law should be nixed in its entirety.

In 2012, the United States Supreme Court gave the green light to the mandate, arguing that Congress had the right to penalize the uninsured through its power to impose taxes. When Congress eliminated that fee as part of its sweeping change to the federal tax code last year, Republican lawmakers argued that the mandate could no longer be upheld as a tax.

Though the federal Justice Department disagreed that the entire law should be struck down, it declined to defend either the individual mandate or the requirement that insurance providers offer coverage to those with pre-existing medical conditions.

Last month, Becerra and this same blue coalition of lawmakers successfully requested that the Texas court’s decision be suspended while the legal challenge makes its way through the court system. That process takes another step now as the Fifth Circuit Court of Appeals must decide whether to take up the challenge.

“We are going to take it wherever we need to take it,” said Becerra.

Since passage of the Affordable Care Act eight years ago, some 5 million more Californians get coverage through expanded Medi-Cal, private plans under the state’s Covered California exchange, and the ability of young people under age 26 to stay under their parents’ insurance. That represents a quarter of all Americans covered under the law. In addition, about an eighth of the state’s budget is derived from the $25 billion the federal government provides to subsidize Affordable Healthcare Act plans and the expansion of Medi-Cal.

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Politics

In a scramble to keep people enrolled in health-care plans, what did New Jersey, Vermont and the District of Columbia do earlier this year that California has not done?

They began requiring that their residents carry health coverage or face a state penalty for going without it. Such “individual mandates” aim to replace the federal mandate—perhaps the most controversial but essential part of the Affordable Care Act, often called Obamacare —that sought to force people to sign-up for health insurance or pay a tax penalty. The Republican Congress and the Trump administration have repealed that federal penalty, effective next year.

The clock is ticking. Obamacare has led to a record number of Californians having medical coverage. But a new study warns that if the state does nothing to counteract the Trump administration’s moves to undermine Obamacare, up to 1 million more Californians could be without health insurance within the next five years.

What’s kept California from enacting its own mandate? Some state Democratic leaders are wary of enacting a state mandate without also making health insurance cheaper for Californians.

“Providing subsidies is a better reality for members of our community than providing penalties,” said Assemblyman Joaquin Arambula, a Fresno Democrat who co-chaired the select committee on universal healthcare that conducted town halls across the state last summer. “It’s the carrot versus the stick.”

Sacramento State Sen. Richard Pan, a Democrat who chairs the Senate Health Committee, said the Legislature is focused on keeping the state’s insurance market exchange, known as Covered California, strong. Some 2 million Californians buy health coverage through the exchange, which provides federal subsidies to low-income purchasers.

“We are going to do what we can in California to stabilize the insurance market, to do what we can to make health insurance, particularly on Covered California, affordable,” said Pan, who has not yet endorsed any particular remedy. “We are up against a federal administration that is doing the opposite and forcing people to pay higher premiums.

“As we look at options—like do we want to do an individual mandate?—we also need to recognize part of what is driving that is not only the removal of the federal mandate, but also actions taken to increase insurance premiums,” said Pan.

Since the Affordable Care Act was implemented in 2013, the state’s uninsured rate has dropped from 20 percent to 7 percent. Currently, 3.4 million Californians are uninsured, with undocumented immigrant adults making up the majority of that group.

But without more aggressive state intervention to counter Washington’s retreat from the program, an estimated 500,000 to 800,000 more Californians under 65 will be uninsured by 2023, according to the new study from the UC Berkeley Center for Labor Research and Education and the UCLA Center for Health Policy Research.

A mandate and state subsidies are among options the Legislature will be exploring to combat the expected exodus from insurance. But both are controversial. An Economist/YouGov poll found that 66 percent of Americans oppose a mandate. And although a few other states such as Vermont and Massachusetts do offer state subsidies, in California, state subsidies could cost up to an estimated $500 million, at a time when an incoming Democratic governor and Democratic supermajorities in the Legislature have promised pricey programs such as universal healthcare and universal preschool.

So far, Covered California enrollment, now underway through Jan. 15, is meeting projections—with a big caveat. As of the end of November, more than 90,000 newly insured people signed up, said Peter Lee, its executive director. But those projections already were lowered by 10 to 12 percent compared to last year, because it was unknown what effect the removal of the penalty would have on sign-ups.

“There’s no question that a penalty imposed on individuals for whom health insurance is affordable is a good policy,” said Lee, who said he would follow whatever rules the Legislature adopts. “The penalty encourages people to participate in a system that, if they don’t, we all bear the cost. And it encourages people to do the right thing for themselves.”

Covered California is working on a report commissioned by the Legislature on how to best bolster the system. It’s due in February, and Lee said a variety of options are on the table including a mandate, expanding subsidies and using state money to lower premiums, a process called reinsurance.

Some of those ideas echo the recommendations UC researchers offered in their study: incorporate a state mandate with penalty funds going to toward making insurance more affordable, state-funded subsidies in addition to the existing federal subsidies, and a Medi-Cal expansion to include low-income undocumented immigrants.

These are not new ideas, but they are politically and financially costly, said Gerald Kominski, a fellow at the UCLA Center for Health Policy Research.

“We know that the mandate drives people into the market,” said Kominski. “If you’re going to pay a tax penalty and not have health insurance, why not look for insurance when almost 90 percent of those who buy in through Covered California received some sort of subsidy?”

“The state could consider bringing the whole threshold down for everybody,” he continued. “The point is to lower the thresholds and make people pay less out of pocket. That would increase affordability for lots of families.”

Some advocates agree that a potential state mandate must also include a mechanism for making insurance more attainable.

“We don’t want to require people to buy coverage that they can’t afford. And what they can afford may be different in a high-cost-of-living state like California,” said Anthony Wright, executive director of Health Access, which advocates for consumers. “That’s why it’s hard to have a conversation about a mandate without affordability assistance.”

Under the federal mandate, Americans were compelled to carry health insurance or pay a penalty of $695 per adult, or 2.5 percent of household income, whichever is higher, unless insurance costs more than 8 percent of a household’s income.

With the repeal of that ultimatum, California is bracing for the biggest dropouts among its residents who have been buying insurance through the subsidized Covered California program. The program projects it could lose 10 to 30 percent of its participants.

But the state also expects wider losses, including among the 46 percent of Californians who get insurance through employers, because they also will no longer be required to have it. Even Medi-Cal, the state-paid program for low-income Californians, will lose about 350,000 people, the study estimates, because the lack of a federal mandate may deter people from seeking health coverage at all—meaning they’ll never discover they qualify for Medi-Cal.

Last year, the California Legislature considered creating a state mandate as part of budget discussions that included making insurance more affordable, but neither idea made it into the final budget proposal submitted to the governor.

Experts and advocates are hopeful that these ideas may gain traction under Gov.-Elect Gavin Newsom, who has talked a big game on health care and access pledging during his campaign to support single payer and universal coverage.

If more Californians drop their health insurance, everyone pays. People most likely to drop out are the young and the healthy, expert say. But they are critical to keeping the whole operation afloat, because the system cannot be made up of only sick people.

California already has taken steps to shore up the Affordable Care Act: banning short-term health plans, adopting legislation barring work requirements for Medi-Cal, and offering a longer open enrollment period.

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Politics

As Gov. Jerry Brown neared the end of his last State of the State speech on Thursday, Jan. 25, he invoked a name that has become a frequent theme: August Schuckman, his own great-grandfather, who left Germany in 1849 and “sailed to America on a ship named Perseverance.”

The 79-year-old Democrat cast his ancestor’s journey—and the ship’s poetic name—as a metaphor for California in an era of natural disasters and deep rifts with the federal government. “We, too, will persist,” he said, “against the storms and turmoil, obstacles great and small.”

Brown, delivering his 16th such speech during an unprecedented four-term tenure as California governor, contrasted California with the direction the United States is heading under Republican President Donald Trump—touting the state’s efforts to combat climate change and its embrace of Obamacare. He reiterated his commitment to two major infrastructure projects he’s long championed: a high-speed train that would eventually connect Los Angeles and San Francisco, and a massive tunnel to move water from the north end of the state to the south. And he gave an impassioned plea for legislators to look at the big picture of California’s criminal-justice system instead of passing new laws in response to crimes ripped from the headline.

Democrats praised Brown for an optimistic speech that demonstrated the hallmarks of his leadership. Even some Republicans offered mild praise: Assembly Republican Leader Brian Dahle called Brown “one of the most conservative Democrats in this place” for his relative prudence. But he criticized the governor for signing laws, like the gas tax, that raised the cost of living in California.

What Brown didn’t mention: the fact that California has the highest poverty rate in the nation; that housing prices that have skyrocketed beyond affordability for many residents; and that the state’s tax structure exposes it to perpetual cycles of boom and bust.

Also absent were the obscure intellectual references that have studded his past speeches—although he did contrast the state’s bloated penal code with the Ten Commandments.

His also struck some themes that are vintage Jerry Brown. He cited California’s recent wildfires and mudslides, as well as the Doomsday Clock, echoing past speeches in which he predicted environmental disaster. He advocated remedies to slow global warming—like clean cars and renewable energy—that resembled ideas he espoused when he was first elected governor more than four decades ago.

“We should never forget our dependency on the natural environment and the fundamental challenges it presents to the way we live,” Brown said to his 2018 audience. “We can’t fight nature. We have to learn to get along with her.”

Yet as he looked forward for California, he also looked back at his own family history. When Brown was first sworn in, in 1975, he rarely talked about his ancestry. As the years mounted, however, he has increasingly turned to his family-origin stories to illustrate his belief in California’s potential.

Now the Brown family’s California Dream is a common trope in his rhetoric. He talks about the great-grandfather on the Perseverance, the grandmother who was the youngest of eight children, and the father, Pat Brown, who preceded him in the governor’s office.

Some of that reflection may be the natural consequence of age. But it also reveals a governor more assured of his own accomplishments and less fearful that he’s riding on his father’s coattails, said political scientist Sherry Bebitch Jeffe. A professor at University of Southern California, she’s been following Brown’s career since he ran for the Los Angeles Community College board in 1969.

The younger Brown first moved into the governor’s office less than a decade after his father had moved out. During those first two terms in office, Jeffe said, Brown went to great lengths to distinguish himself from his father.

“He did not want to live in his shadow,” she said. “Jerry wanted to build his own legacy, his own philosophy of governance.”

His early speeches reflect the schism. Brown—a 37-year-old bachelor at the time, who famously slept on a mattress on the floor of an apartment—opened his inaugural address in 1975 with a quick quip about his dad. “My father thought I wasn't going to make it,” to become governor, he said. “But here I am.” He went on to talk about problems with environmental and land-use rules, and the need to provide a better system for funding schools and farmworker rights.

For the next six years, Brown used his State of the State speeches to float ideas: developing more clean energy, building more prisons, making housing more affordable, putting a satellite into space, and overhauling the bail system. Then, as now, he acknowledged the uncertainty of the future and urged lawmakers not to spend too much.

But near the end of his first two terms, Brown’s 1982 State of the State speech reminisced about his father, his grandmother and his great-grandfather Schuckman, who traveled the plains from St. Louis to Sacramento during the Gold Rush.

“Let me read to you from the diary that was kept during that trek westward,” Brown said then, recounting in detail their journey across deserts, through rivers and over mountains. He spoke of oxen dying of thirst and wagons going up in flames.

“These were men and women who matched our mountains, and in not too many years, built these walls,” Brown said. “We are bearers of that powerful tradition. It still drives our people and the hundreds from foreign who arrive in our state each day.”

Most people assumed, of course, that 1982 speech would be Brown’s final State of the State. But after serving as Democratic Party chair, Oakland mayor and attorney general, he reclaimed the governorship in the November 2010 election. In his inaugural address in January 2011, Brown again read from Schuckman’s diary.

“We can only imagine what it took for August Schuckman to leave his family and home and travel across the ocean to America and then across the country—often through dangerous and hostile territory—in a wagon train. But come he did, overcoming every obstacle,” Brown said.

In 2015, Brown reflected on his father’s leadership in ways he never did in those speeches during his early years as governor.

“The issues that my father raised at his inauguration bear eerie resemblance to those we still grapple with today: discrimination; the quality of education and the challenge of recruiting and training teachers; the menace of air pollution, and its danger to our health; a realistic water program; economic development; consumer protection; and overcrowded prisons,” Brown said. “So you see, these problems, they never completely go away. They remain to challenge and elicit the best from us.”

Whatever challenges lie ahead for 2018 and beyond, Brown said on Thursday: “All of us—whatever our party or philosophy—have a role in play in defending and advancing our democracy. Our forebears set the example.”

Now he’s planning retirement on the rural land in Colusa County where Schuckman settled in the 1800s. Though Brown’s upbringing is very different from most Californians, his family stories can make the austere governor more relatable, said Roger Salazar, a Democratic political consultant who works for the Legislature’s Latino Caucus.

“It’s a story that I think a lot of legislators can relate to,” Salazar. “When you look back at your familial history and the context in which they came to California, I think that’s something that we all can connect with.”

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Politics

California’s resistance began before there was a resistance.

When Gov. Jerry Brown unveiled his final budget on Jan. 10, it bookended eight years of a progressive march to reduce greenhouse gases, expand health care, grant more rights to undocumented immigrants and raise the minimum wage to $15 an hour. Along the way, voters have assented by passing temporary taxes on the rich—not once, but twice. The top marginal income tax rate is now 13.3 percent, the highest state income tax rate in the country.

In short, policies that are now labeled acts of resistance to President Donald Trump were alive and ascendant in California long before Trump won the White House. But the contrasts have become much more stark.

Instead of cutting taxes, the Democratic governor and his party’s legislative leaders have passed a gas tax to help pay for aging infrastructure. Instead of trying to shift government out of the healthcare marketplace, California is looking for a way to fund single-payer health care, including coverage for undocumented immigrants. Instead of criminalizing pot, the state is looking forward to collecting taxes on marijuana sales.

In the months between now and the June deadline for a final budget, the governor and the Legislature will hammer out details. The focus this year: what to do with an expected surplus of $6.1 billion—and there are definitely differing opinions all around. Republicans say return it to California’s 40 million residents as a nice tax refund. The governor's priority is to fill up the state’s rainy-day fund. Democratic legislators mostly want to spend it.

“We have a very different approach,” said Assemblyman Phil Ting, D-San Francisco, who chairs the Assembly Budget Committee. “Our focus, the people who we think need tax relief, are the working Californians who are making less than $25,000. That’s where we want to spend our money, making sure they have money to pay rent, to pay for food.”

Rather than giving out “huge corporate tax breaks and a huge tax break for the wealthiest in this country,” Ting has a long list of how he would like to spend that extra money, including:

• Increasing the state’s Earned Income Tax Credit, which puts money into the hands of the working poor.

• Expanding Medi-Cal health care for poorer Californians to cover all remaining uninsured residents, mostly undocumented immigrants.

• Expanding early education for 4-year-olds through preschool and transitional kindergarten programs.

• Increasing college aid.

• Expanding mental and social services to reduce the number of criminals who go on to re-offend.

As supportive as Brown might be of these Democratic aspirations, his administration is urging legislative leaders to proceed with caution. The state’s tax structure is more vulnerable than ever to the stock market gains and losses of its wealthiest citizens, and the governor said California must prepare for the next economic downturn, because a mild recession could wipe away at least $20 billion a year in revenues.

He also warns of uncertainty from Washington, D.C.

“There are certain policies that are radical departures from the norm, and California will fight those, whether it’s immigration or offshore drilling,” Brown said. “We don’t know what will happen. I wouldn’t want to portray a California-Washington battle, although there are some key differences, and we’ll espouse our values.”

Since Brown was elected to begin his second stint as governor in November 2010, the state has climbed out of the recession and enjoyed economic prosperity. The unemployment rate, which topped 12 percent, now stands at 4.6 percent. Since his return, California has added 2.4 million jobs, and hourly wages are up $4.76 an hour. The state, which carried a $25 billion deficit in his first year back, has enjoyed billion-dollar surpluses in recent years, and the state now has a rainy-day fund.

The governor’s proposed $190 billion budget is dominated by spending on education (29 percent) and health care (32 percent). Health care spending has been growing particularly fast since the state embraced the Affordable Care Act, also known as Obamacare. The act not only grew the marketplace for private health plans; it allowed states to expand their Medicaid health insurance programs for the poor.

Because California is among 30 states that expanded Medicaid, the federal government is paying at least 90 percent of the cost for newly eligible enrollees. That has allowed California to draw billions in extra funding from the federal government to bolster Medi-Cal, the state’s version of the national Medicaid program. As a result, the number of people without health coverage in the state has dropped to a historic low: from 17.6 percent in the 1980s to 7.6 percent in 2016. Today, one in three Californians is covered by Medi-Cal.

Public schools too have greatly benefited since the recession, with much of the extra spending on schools going to improve teachers’ salaries.

However, if the federal government doesn’t reauthorize the Children’s Health Insurance Program for 1.3 million children, that could add more than $850 million in costs to the state over two years.

Worse, if Republicans in Washington slash Medicaid funding in 2018, the state could lose between $25 billion and $50 billion, said Chris Hoene, executive director of the California Budget and Policy Center, a progressive think tank in Sacramento.

“The reality is California could not afford the scale of the cuts the GOP has been proposing,” Hoene said. “That’s going to put state leaders in a position of deciding who gets state services and how do they fund that.”

Other factors are straining the budget. For example, pension costs for public workers continue to be one of the fastest-growing liabilities—driven by lower investment-rate assumptions, higher health care costs and longer life spans.

Voters, too, could turn on Brown and lawmakers. Early polling suggests Republicans have a decent shot at repealing a gas tax hike that went into effect late last year. Brown said at a press conference Wednesday that he believes a repeal initiative could be defeated.

The Legislature’s nonpartisan budget analyst is also urging lawmakers not to commit to too many new spending programs.

“As it crafts the 2018-19 budget and future budgets, we encourage the Legislature to consider all of the uncertainty faced by the budget in future years and continue its recent practice of building its reserve levels,” the analyst wrote.

On the flipside, Republicans are calling for a tax refund, if not an outright repeal of state income taxes. They argue that California’s high taxes chase residents out of state.

“This surplus is a direct result of Capitol Democrats overtaxing hard-working Californians,” said Assemblyman Matthew Harper, R-Huntington Beach. “Rather than expanding an ever-growing list of government programs, our leaders should figure out a way to return that money to the people who earned it in the first place.”

Assemblyman Vince Fong, R-Bakersfield, said he plans to introduce tax cuts aimed at helping families and small businesses stay in California.

“As we see all too often now, we are losing families and small businesses to neighboring states that have tax burdens much lower than California’s high-priced tax code,” Fong said on Twitter. “We have an opportunity to change that.”

Brown dismissed the refund idea, saying it would only prompt service cuts to public schools and universities later. “If you want to budget responsibly, you need big surpluses in years that are good,” he said.

Still, there’s a growing sentiment that California may have to respond to recent changes in the federal tax plan, specifically a $10,000 cap on state and local deductions that will hit millions of households.

According to the state Finance Department, the average deduction for state and local income taxes alone is nearly $16,000 per return, while state and local property taxes average less than $6,000 per return. Because a portion of those taxes will no longer be deductible, it acts as double taxation for California taxpayers.

Senate President Pro Tem Kevin de León, who is running for U.S. Senate, introduced legislation Thursday to shield Californians from bearing the costs of the tax overhaul. The bill, dubbed Protect California Taxpayers Act, would allow taxpayers to make charitable deductions to the state and receive a dollar-for-dollar tax credit on the full amount of their contribution. By having residents donate to the state government as a charitable contribution, the contribution remains deductible on federal taxes.

“The Republican tax plan gives corporations and hedge-fund managers a trillion-dollar tax cut and expects California taxpayers to foot the bill,” de León said in announcing his legislation. “We won’t allow California residents to be the casualty of this disastrous tax scheme.”

Brown was particularly vocal against the GOP tax proposal, calling it a “tax monstrosity,” but the governor expressed reservations about whether the state could sidestep federal law.

“It looks interesting,” Brown said. “But two questions: Can it work? If it does work, can the Internal Revenue Service issue a regulation and completely subvert it?”

De León responded that he was confident it would work, because similar charitable deductions have already been given out for education-based contributions.

For now, state Democrats are in agreement about a common threat.

Whether it’s federal tax changes or entitlement cuts, the leader of the Assembly, Anthony Rendon, D-Paramount, said he’s most concerned Republicans in Congress and the Trump administration will take another swipe at liberal California in 2018. “We’re worried about the next shoe to drop.”

CALmatters is a nonpartisan, nonprofit media venture explaining California policies and politics.

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California’s Democratic legislators want to extend health benefits to undocumented young adults, the continuation of an effort that ushered children without legal status into the state’s publicly funded health care system last year.

It is unclear when the program would start or how much the state would spend if the proposal, which could cost up to $85 million a year, is approved by Gov. Jerry Brown. Lawmakers are working out details ahead of their June 15 deadline for passing a new budget.

The plan would provide full-scope coverage for 19-to-26-year-olds who qualify for Medi-Cal, the state’s name for Medicaid. Currently, the federally funded program covers only emergency visits and prenatal care for undocumented residents. Under the proposal, revenue from taxes on tobacco products would absorb expenses for all other coverage.

Democratic Sen. Ricardo Lara of Bell Gardens has been one of the strongest voices for expanded care. In 2015, he pushed for coverage for all adults. That proposal was changed to admit only undocumented children; it took effect last year. This year, he said in a recent video message to supporters, “We are going to make the final push to ensure we capture our young adults.”

Supporters’ ultimate goal is to include all undocumented adults, said Anthony Wright, executive director of Health Access California, a health care consumer group backing the proposal.

“We believe without coverage, people are sicker, die younger and are one emergency away from financial ruin. It has consequences for their families and their communities—both health and financial consequences,” he said.

The plan would mean that undocumented children currently in the program would not age out at 19, putting low-income undocumented immigrants on par with those allowed to stay on their parents’ insurance under the Affordable Care Act (often called Obamacare) until they are 26.

Republican Sen. John Moorlach of Costa Mesa opposes an extension of benefits. One reason is financial: California doesn’t have “a balance sheet we can brag about,” he said, citing the state’s debt load, among other reasons.

Secondly, he disapproves of illegal immigration. Moorlach migrated to the U.S. legally as a child with his family from the Netherlands.

“I’m kind of offended that we feel an obligation to pay for expenses for those who did not come through the front door,” he said. “I certainly have compassion and want to help people in need, but I’m having difficulty, as a legal immigrant, because we are already in such bad fiscal shape.”

Advocates argue that undocumented immigrants help propel California’s economy with their labor and the taxes they pay, and that they cost the state money when they don’t work because of illness or when they end up in the emergency room.

“Health care is a right,” said Ronald Coleman, director of government affairs for the California Immigrant Policy Center, an advocacy organization and supporter of the proposal. “These are folks we are investing in through the California Dream Act and through other programs our state offers, and it makes sense to invest in our future, which our young adults will be.”

Estimates vary for how many people this expansion of Medi-Cal would serve and what the costs would be. Each house of the Legislature has passed its own version of the proposal, with differing figures attached.

The Assembly allocated $54 million a year to cover an unspecified number of additional enrollees, with a July 2017 start date. The Senate proposed $63.1 million in the first year, beginning in 2018, and $85 million annually thereafter, also without specific population numbers.

Coleman’s center, which is working closely with lawmakers on the issue, estimates about 80,000 new people would be eligible, and the cost would be around $54 million a year. That assumes the federal Deferred Action for Childhood Arrivals program continues, because it provides access to Medi-Cal. If DACA were eliminated, the figures would increase to about 100,000 eligible people and about $84 million in annual costs, Coleman said.

The governor’s proposed budget does not include the proposed expansion or any money for it.

Kevin, a 19-year-old Angeleno who asked that only his first name be used, because he lives in California illegally, wants the proposal to succeed. He has been working for more than a year to distribute information about Medi-Cal children’s coverage to immigrant families.

He meets all but one of the requirements for DACA: He was not in the country before June 15, 2007. He arrived in the U.S. in 2011 at age 14 from Guatemala, on a visa that later expired. He graduated high school, has no criminal record and is now majoring in business administration at California State University, Los Angeles.

“There’s this misunderstanding that young people are healthy,” said Kevin, who suffers from eczema. He worries about the chronic condition flaring up. “When it gets worse, it doesn’t let me do anything with my hands.”

He is enrolled in a county health insurance program for low-income residents, but he can’t afford a dermatologist. He can barely pay for the prescription lotion he uses for the eczema, and sometimes goes without it.

“We are trying to have a better economic standard, and we are like the building blocks of this society,” he said. “Having health insurance will allow us to focus more on school and do our regular day-to-day activities. A healthier society works better for everyone.”

If lawmakers can now agree on details, a consensus proposal will go to the full Legislature for approval. The deadline for that is June 12.

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