Senate and Assembly Budget Committees Approve Cuts in Education and Healthcare
This week, the Senate and Assembly Budget Committees approved emergency cuts in school spending and healthcare, including a 10 percent cut in Medi-Cal reimbursements to doctors and hospitals. These actions address the current year $3.3 billion budget deficit and projected $14.5 billion shortfall for FY 2008-09.  Gov. Schwarzenegger declared a fiscal emergency on Jan. 10, and called a special session of the legislature, giving lawmakers 45 days (until Feb. 23) to address the budget gap. 

The reduced Medi-cal reimbursement rates will take place July 1, the start of the new fiscal year.  There are no current year budget cuts to the Medi-Cal program, but lawmakers had to make the cuts now in order for the state to implement changes effective July 1.  This rate reduction represents a total savings of $544 million. Most affected are providers who serve Medi-Cal beneficiaries and Medi-Cal managed care plans.  The California Department of Health Services previously testified that California ranks 41st in the nation in provider payments.  Proposed reductions are expected to pass the full legislature today with bipartisan support.

Next week, Elizabeth Hill, the state’s independent budget analyst, is set to release her analysis of the 2008-2009 budget. It is expected to show a grim picture with an ever-growing deficit.  Legislators plan to make additional cuts in the coming months as they negotiate the rest of the FY 2008-2009 budget.

Republicans Battle for Top Senate Leadership Position
With Senate Republican leader Dick Ackerman from Orange County forced out by term limits, several names have emerged as possible replacements, including Sen. Dave Cogdill of Modesto, Sen. Dennis Hollingsworth of Temecula and Sen. Bob Dutton of Rancho Cucamonga.  Sen. George Runner of Lancaster has withdrawn his name from consideration after his wife, Assemblymember Sharon Runner, announced this week that she has scleroderma and is waiting for a lung transplant.  Senate Republicans have not scheduled the vote for a new leader; many speculate it could happen in May.  As for the Assembly, Republican leader Mike Villines is not termed out until 2010 and it appears that he will remain in his leadership position this year.