Gov. Jerry Brown signed the state's budget for the coming fiscal year into law Thursday, marking the third consecutive year that this particular task has been accomplished on time — a sharp contrast to the prior decade's routinely late budgets. And to their credit, Brown and the Legislature relied on comparatively few gimmicks to make ends meet, even as they started reinvesting in education, mental health, child care and other programs whose budgets were cut during the economic downturn. But one of the biggest initiatives in the budget — the expansion of Medi-Cal, the health insurance program for the impoverished — could be undermined by some of the cuts lawmakers did not undo.
The state's improved fiscal picture is a direct result of the aforementioned cuts, along with the tax increases that voters approved in November. The state still faces real fiscal challenges, however, including huge unfunded liabilities in retiree benefits for state workers and a multibillion-dollar shortfall in unemployment insurance.
More immediately, the state is flirting with disaster in Medi-Cal. Lawmakers made the right choice in agreeing to extend the program to more than 1 million low-income Californians, with the federal government picking up the vast majority of the costs. But there may not be enough doctors, hospitals and clinics to treat the more than 7.5 million people already in the program if the state implements a long-delayed 10% cut in payments to healthcare providers later this year, as planned. Because the cuts are retroactive at least to 2011, many providers will see 15% reductions, and some hospital nursing units will have their payments cut by 25% to 40%.