By: Health Insurance
Submitted: 2009-10-08 09:05:56 | Word Count: 909
California officials are finding ways to avoid some of the dire consequences that were expected from closing the state's $24 billion budget gap.
For most of the summer, state agencies and constituents had feared the worst as lawmakers hacked $16 billion from programs in order to close the deficit. But through a combination of new legislation, funding shifts and other cuts, the state has so far mitigated the potential effects of three significant budget reductions.The most recent move came two weeks ago, when Republican Gov. Arnold Schwarzenegger announced he wouldn't close 100 state parks as part of a $14.2 million cut to the Parks Department's budget. That followed new legislation passed last month that restored $196 million to California's Healthy Families insurance program. And in August, a planned cut of $7 million for an airplane used to fight wildfires was also restored through emergency funds.
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When the budget was passed in July, critics decried the deal as "catastrophic" and "devastating." But some of the grim impacts that many prognosticated haven't come to pass because cuts can change after a budget is passed, said Daniel J.B. Mitchell, professor emeritus in the UCLA School of Public Affairs. Sometimes, threats at the time of a budget's passing are "kind of a negotiating thing," he added.
Not all state programs have been able to sidestep the cuts. A nearly $2 billion budget reduction to the state's higher-education systems has led to faculty furloughs and fewer class offerings. A $1.2 billion cut to the state's Department of Corrections and Rehabilitation has triggered the elimination of more than 1,800 positions.
Aaron McLear, a spokesman for Gov. Schwarzenegger, said the state wasn't able to fund all the programs it has in the past but added that "if we can mitigate the effects of these budget cuts, we want to do that."In the case of the state parks, the California Department of Parks and Recreation said in July that a $14.2 million funding cut meant 100 of the state's 279 parks would close. But in late September, the state determined that if the Parks department reduced maintenance, stopped new equipment and vehicle purchases, and trimmed hours of operation at most parks, that would be enough to keep all state parks open.
The state lopped $178 million from the Healthy Families insurance program, its version of the federal Children's Health Insurance Program, in July. The cut sparked concerns that more than 700,000 California children would lose health insurance. "That's when reality set in," said Democratic Assembly Speaker Karen Bass.
In August, Ms. Bass helped broker and pass a bill that continued a 2.35% tax on insurance premiums for Medi-Cal managed-care plans, generating $97.5 million. Combined with an $81 million grant from the First Five California Children and Families Commission, a state program that funds health and education for children younger than 5, and $17.5 million from increasing co-pays for doctor visits, the Healthy Families budget remained intact.
Still, the solution is likely just a one-year fix. The $81 million from First Five California consumed about half of the commission's savings, which took about 10 years to accumulate, said Kris Perry, First Five's executive director. That means the program will be hard-pressed to make similar contributions to Healthy Families in the future, she said.
In July, state officials also cut $7 million from the Department of Forestry and Fire's budget by canceling a contract for a DC-10 airplane that helps fight wildfires. After a financial review in August, however, state officials reinstated the contract using money from a $182 million emergency Wildland Fire Suppression Fund because of the high probability of wildfires this season, said H.D. Palmer, spokesman for the state Finance Department.
Even though some solutions have been found for this year, concerns about the 2010-11 fiscal year -- when the Finance Department forecasts a $7.4 billion gap -- are already cropping up. "We're going to continue to face a challenging environment," said Mr. Palmer.
Avoiding the impacts that appeared inevitable just a few months ago may also make it appear that officials exaggerated the severity of the state's fiscal situation amid the political wrangling over a deal. "There's some indication that when the governor had first put forth his proposals, he did the ol', 'Take all the policemen off the streets,' " said Henry Brady, dean of the Goldman School of Public Policy at the University of California at Berkeley.
Mr. McLear, the Schwarzenegger spokesman, rejected that idea, saying it is clear officials aren't "crying wolf" because most programs aren't getting funding restored. "We'd love to fund all of those programs that were cut," he said, "but we simply can't spend money that we don't have."
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