CHA News Article

Governor’s May Budget Revision Adds $1.2 Billion for Health Reform, Fails to Restore DP/SNF Cuts

Governor Brown announced May 13 that, despite the state achieving a solid balanced budget, there are lingering uncertainties regarding the costs of the federal Affordable Care Act.As a result, the budget now calls for an increase in annual spending of $1.2 billion to cover the cost of an expected 11.5 million enrollees — approximately 30 percent of the state’s population — in Medi-Cal for state fiscal year 2014-15. The revised budget does not include a solution for the pending retroactive cuts to hospital distinct-part skilled-nursing facilities (DP/SNFs) that are scheduled to be implemented in July.

The May Revision includes a net revenue increase of $2.4 billion due to higher-than-expected personal income tax withholding, partnership income and dividend income. However, the Governor said that the increased Medi-Cal costs, expenses related to the drought and a plan to fund teacher pensions will consume all of the expected revenue growth. Total General Fund spending for 2014-15 is expected to be $107.8 billion. The May Revision sets aside 3 percent of the expected 2014-15 revenues – half of which will be used to make a supplemental payment on debt, with the other half ($1.6 billion) saved in the Rainy Day Fund.