Sacramento Update May 23, 2015

We are heading into the last week of bills moving from their house of origin. For those bills still moving, a number are either on the floor of their respective houses or already in the second house. Many more bills are still awaiting a vote to move off suspense. Assembly Appropriations will meet on Thursday, May 28th and there are 16 pages of bills to be dispensed with – either voted off suspense or the bill is held in committee. Senate Appropriations also meets on May 28th, there are well over one hundred bills scheduled for that day.

When bills are in suspense, there is no testimony nor can the authors present the bills. The process for Suspense is as follows: The Chair, calls each bill and the vote is: A roll call – all committee members vote for the bill to move to the floor B roll call – only Dems vote for the bill to move The bill is not called, meaning it was not voted off suspense

The May revise occurs every May, usually about mid- month and allows the Governor to “update” his budget. The changes to the budget are based on revenues coming into the state during January through April and other concerns, the governor will “tweak” the various policy areas. The May revisions also allow the legislative budgets to be finalized. This coming week, budget hearings will be completed and a Conference Committee will be established to review those items for which there is no agreement.

If an item is approved in one house and not the other, the item will be part of the Conference discussion. The Conference Committee is usually comprised of the Chairs of Assembly and Senate Budget Committees along with 2 Republicans – one from each house and the remaining members are Democrats. The Conference Committee discussions are open to the public, but no public comment is taken. Discussions occur between the committee members, the Dept. of Finance – governor’s budget staff and the LAO – the legislature’s budget staff. However, there is much advocacy going on between lobbyists and the aforementioned staff in between hearings. The budget bill which has to be on the Governor’s desk by midnight of June 15th will represent the priorities of the legislature and the governor.

Budget Issues

As noted last week, the key issues for the Governor were:

In keeping with Prop 98 - $5.5 billion, of the $6.7 billion additional revenue, was appropriated to K-14 The rainy day fund – Prop 2 - will received $633 million and an equal amount to

Lydia Bourne, Legislative Advocate Page 1 of 4 pay down outstanding debt.

Additionally, the Governor committed new spending to only three areas:

The California Earned Income Tax Credit, first ever, which will assist the state’s lowest-income workers. The credit will provide $380 million in benefits to 2 million Californians.

No tuition increases for students at UC or CSU for 2 years. CSU receives additional funding and UC temporary assistance to pay off unfunded pension liability.

Providing health care and other safety net services to currently undocumented immigrants who gain Permanent Residence Under Color of Law, this is based on the President’s executive actions.

For more detail on each area of the budget, please click the link: http://www.dof.ca.gov/documents/2015-16_May_Revision.pdf

The LAO also provides their assessment of the governor’s budget, at this link: http://www.lao.ca.gov/Budget?subjectArea=OMR

Economy and Unemployment

A recent report from the Dept. of Employment Development and the Dept. of Finance states that we have the lowest rate of unemployment since 2008. The unemployment rate statewide fell to 6.3 percent, down two-tenths of a percent. Nonfarm employers added 29,500 jobs during April. A year ago, the unemployment rate was 6.9 percent in Sacramento and 7.8 percent across the state.

The improving economy has assisted housing sales, which are up for the fifth straight month with the last three in double digits. However, discussions continue on how to address the high cost of housing in California, the lack of adequate subsidized homes for lower income families and most problematic, how do we address these issues?

As a sign of the improving economy and to start to address the increasing wage gap, on Wednesday, May 20th, the Los Angeles City Council passed a staged increase that would get the minimum up to $15 by 2020, by a vote of 14 to 1.

The New York Times reports “Los Angeles is the fourth city, and by far the largest, to enact a $15 minimum in the past year. The others are Seattle, San Francisco and Emeryville, California. A $15 minimum has been proposed in New York City, Washington, D.C., and Kansas City, Mo.”

They further report that in spite of complaints from business groups, there is little creditable evidence that jobs are lost, businesses close or leave the cities where this is

Lydia Bourne, Legislative Advocate Page 2 of 4 instituted. For more of the discussion, see links below: http://www.nytimes.com/2015/05/21/opinion/a-15-minimum-wage-bombshell-in-los- angeles.html http://calwatchdog.com/2015/05/22/will-businesses-react-l-minimum-wage-boost/

Health Care

Covered California last Friday issued rules that will cap the cost of specialty drugs. These are drugs that treat Hepatitis C, HIV, multiple sclerosis, etc. This new ruling affects those consumers who are in the individual market. The costs for those in the silver and platinum plans will pay $150-$250/month, bronze plans pay $500. The caps will take effect starting in 2016.

Western Dental, the state’s largest provider of Denti-Cal services to low-income patients, said it will no longer accept new patients under the program at more than a dozen of its clinics starting June 1. Western Dental is concerned about the reimbursement rates and states they are too low for providers to continue to provide services, while covering costs.

It should be noted that a December 2014 audit report of the Denti-cal program showed that “more than half the state's children in Denti-Cal were not getting regular dental care and that 32 of California's 58 counties may have a dental access problem because of a dearth of providers.” In a March 2015, an oversight committee comprised of the Joint Legislative Audit committee along with the Assembly and Senate Health committees, questioned DHCS regarding the findings. DHCS agreed to implement eleven standards along with providing the results of a provider survey conducted in November and December, 2014. An annual report will be provided to the Legislature.

One major issue that has plagued California for a number of years is the Medi-cal provider reimbursement rate and again this budget cycle, the governor has not removed the 10% Medi-cal reimbursement cut. It appears the budget committees will reverse the cuts and also attempt to bring the Denti-cal reimbursement rates up as well.

Affordable Care Act

According to a report1 released in March by the health advocacy group, Health Access, over a year into the full implementation of the Affordable Care Act, some 3 million Californians still lack health insurance. For many, coverage is still unaffordable and almost half of the 3 million are undocumented, and thus unable to access federal health programs.

By law, counties have to provide care to low-income individuals who are uninsured and don’t qualify for other programs. But, says Anthony Wright, CEO “Counties interpret this responsibility widely and wildly, in very different ways.” For example, of the state’s

Lydia Bourne, Legislative Advocate Page 3 of 4 58 counties, only ten “explicitly serve the undocumented in their programs.” “The rest do not serve the undocumented outside of emergency care.”

While the governor’s budget will cover DACA and DAPA, most undocumented residents don’t have coverage. SB 4 (Lara) - Health for All - which would mandate a system to cover the undocumented is in Appropriations and given comments by the governor, funding for such a program is unlikely.

Politics

The East Bay – SD 7 - special election held on May 19th was the one of the most expensive special elections. The approximate cost was $7 million with two Democrats running against each other. But more importantly Assemblywoman Bonilla, who lost was backed by the Democratic Party and organized labor.

Steve Glazer, the winner, a close aide to Jerry Brown and a political consultant although not endorsed by the governor, was favored by the Chamber of Commerce and other business and political colleagues. This election was to complete the remaining one year term of Senator DeSaulnier who was elected to congress. With Senator Glazer’s swearing in this coming week, we will see the reception he receives in Sacramento and how soon the next campaign activities will start.

Drought Issues

California is facing a four year long drought, it is estimated that 94% of California is now in severe drought and 80% of the water is used by farmers. On Friday, California regulators accepted an offer from farmers to reduce their water usage by 25% in an effort to combat the drought. The concession was made after the Water Resources Control board had threatened to cut off their water rights. Cities and towns have already been required to reduce water usage by 25%. This agreement is seen as a sign of the worsening impact of the ongoing drought and its effect on the state. http://ca.gov/drought/ ______

1-http://www.health-access.org/images/pdfs/CountySafetyNetReportSurveyResults3-12-15.pdf Various media sources

Lydia Bourne, Legislative Advocate Page 4 of 4