Showdown At A Capitol Finance Meeting!

Now that you're truly titillated, allow me to explain. Today, Director of Finance Mike Genest and Treasurer Bill Lockyer meet to discuss the amount of money California can expect to receive from the federal stimulus package. The meeting is public and will begin at 10am. Some of our Twittering favorites like Anthony Wright and John Myers will be on hand.

Why is this important? Well, if you've been following things, at issue is the budget "trigger" that would be reached if the state meets a threshold of $10 billion dollars collected from the federal government that can offset General Fund spending. That trigger would reduce tax increases and eliminate some of the worst cuts from the budget deal in February. While there lurks the spectre of a continuing deficit for FY 2010, meaning that any cuts and taxes saved by the trigger would just increase that deficit, the consequences of particularly these cuts are very real as well. They are almost all focused on health care for the very neediest members of society. The aforementioned Anthony Wright explains:

More directly, about three million low-income California parents, seniors, and people with disabilities will lost dental, optometry, podiatry, psychology, and other benefits. A full run-down of the lose benefits, and their economic and human impacts, is available in a handout on our website.

As the chart shows, the list of Medi-Cal benefits to cut share one striking characteristic: elimination of these benefits is not cost-effective and instead is likely to cost the state more to provide care to the same population. For example, the elimination of optometry services means that Medi-Cal beneficiaries will go to ophthalmologists.

The elimination of podiatry means more expensive and less expert care from physicians. The elimination of incontinence creams and washes will lead to Stage 3 and 4 bedsores---bedsores that would be reportable as adverse events or “never events” if they occurred in a hospital. But because they will happen to persons with disabilities trying to live in the community, they will result in the institutionalization of those who could otherwise have remained in the community. Penny-wise and pound-foolish does not begin to describe these cuts.

Those cuts could be entirely offset by the massive corporate tax cut which could go as high as $1.5 billion dollars a year, so I suggest the legislature look elsewhere for their pound of flesh. Not to mention that a failure to get the most out of the stimulus funds would do a disservice to the state. It is unacceptable at this critical time that any money gets left back in Washington. And the tools are in place to cross the $10 billion dollar trigger point, as The California Budget Project has ably shown.

It sets up to be an interesting meeting, as the Treasurer has not made many public comments about the trigger, while Finance Director Genest's reports show the state falling short by $2 billion dollars. Thanks to the poor drafting of this provision, there's no telling the outcome if Lockyer and Genest disagree. Don't expect a resolution today - the participants have two weeks before a final solution.