Pushback: SEIU Potential Walk-Out, Corporate Tax Cut Repeal, Court Overturns Medi-Cal Cuts

Rumors ran rampant yesterday that state employees, pushed too far by yet another salary cut (totaling 20% over the course of the year), would potentially strike.

Doug Crooks, Director of Communications with the Service Employees International Union’s local 1000, which represents more than 95,000 state employees, declined to confirm the rumor but said any decision would be made by the employees through an authorization vote.

“In the first place, that decision hasn’t been made yet,” said Crooks about the plan to strike. “That decision hasn’t been made yet. We are definitely going to strongly oppose and do everything we can to prevent the governor from imposing a fourth furlough day. But check back with me Monday.”

“The bottom line is we negotiated with this governor in good faith and we agreed on a contract that would save $340 million dollars immediately, and if applied to all state employees it would save the state a billion dollars. That’s billion with a ‘B.’ And for the governor to undermine that contract now is beyond irresponsible. He’s made the state employee a pawn” in the state budget negotiations.

“Well actually, it’s a five percent cut on top of those three furlough days,” explained Alicia Trost, a spokesperson for Senate leader Darrell Steinberg. “It’s simply a scare tactic by the governor, yet another, and we feel the state workforce has already paid their fair share. What’s worse is that it would have a horrible effect on the economy if state workers were to lose up to 20 percent of their buying power.”

By the way, Mr. Stogie just lost a furlough case, with a judge tentatively ruling that he cannot furlough the legal staff of the State Compensation Insurance Fund, which has emboldened the larger pool of workers in SEIU. But more to the point, in the world of Arnold Antionette and the Yacht Party, workers making a median income getting 20% salary cuts while the largest corporations doing business in the state get a massive corporate tax break is considered "everyone paying their fair share."

Speaking of which, Lenny Goldberg offers the text of an initiative to repeal the negotiated-in-secret corporate tax cuts and save the state $2.5 billion dollars a year. Opponents typically respond with race-to-the-bottom rhetoric about businesses leaving the state, which isn't true, by the way.

Finally, a federal appeals court ruled that California cannot cut Medi-Cal reimbursements, in an opinion written by a George W. Bush appointee. The familiar pattern of breaking the law to cut the budget often runs up against judicial review, and so the criminals in Sacramento - considering what they're attempting, I don't consider that hyperbole - will have to try something else to achieve their long-sought destruction of the social safety net.

The Story of the Governor And IHSS

As the budget talks stall, let's bore in on what new items the Governor has recently proposed. Out of nowhere last week, he called for policy changes as a condition for agreeing to covering the full budget deficit. He can call them budget-related, or part of the "reform" agenda, but that's a lie. He added new issues into the negotiations, and Karen Bass was right to call him out for it.

Among those new items was this call to "root out fraud" in several programs, including IHSS, Cal-Works and Medi-Cal. The Governor claims that implementing programs to end this fraud would save the state $500 million dollars a year - meaning it would take 14-16 years for this program fix to cover the wasted money caused by his intransigence in refusing the stop-gap fix last week, which lead to the issuance of IOUs. On top of that, those numbers are overstated, and changing eligibility standards is a complex, costly process that will neither improve customer service or even reduce an already-low error rate.

The Governor's response to these comments is that Democrats are somehow protecting union allies and the status quo. If that's the case, what to make of this fact:

In April of THIS YEAR, Democrat Bonnie Lowenthal introduced AB682, which would investigate fraud in the IHSS program. Here's the analysis of the bill:

1) Requires that, beginning January 1, 2010, DSS dedicate two positions to evaluate implementation of five specific anti-fraud provisions of the Welfare and Institutions Code related to the IHSS program and authorizes DSS to fill the positions either by using existing resources or, if an appropriation is provided for that purpose, by adding new positions.

2) Requires DSS, in consultation with the state Department of Health Care Services, the district attorney in the county with the largest caseload, and stakeholders, including IHSS consumers and providers, to provide a report to the Legislature by December 31, 2010, which shall do all of the following with respect to IHSS-related fraud:

a) Identify the magnitude of fraud in terms of the total dollars inappropriately spent or removed from the program, and the number of consumers harmed or placed at risk of harm as a result of fraudulent activity, through instances resulting in a fraud conviction between January 1, 2005 and January 1, 2010;

b) Identify the number of people involved in fraud for each of the following categories: IHSS providers, IHSS consumers, state workers, county workers, and others. In the case of "others," the report shall describe the function of the persons committing fraud with specificity but without revealing personal identifying information; and,

c) Provide recommendations on the best means to combat IHSS fraud.

It may interest you to know how the Assembly voted on the bill. In the Human Services Committee, the Democrats voted yes, the Republicans NO. In Appropriations, all Democrats voted yes, all Republicans NO. The final floor vote went 49-28, with three abstentions. EVERY SINGLE REPUBLICAN VOTED NO except for Paul Cook, who abstained.

The ostensible reason for the Yacht Party united front against the bill? It costs $350,000 to hire two new employees at the Department of Social Services, and give them a budget to look into fraud at the IHSS. To pursue fraud that the Governor says would save the state $500 million a year.

This is basically what you do in government. You learn of a problem, you study it, and then you implement potential fixes for the problem. IHSS fraud was brought up as a problem in April, and Bonnie Lowenthal sought to fix it. The Governor waited around for a few months, then barged in and said Democrats, who were taking the steps to fix the problem, were safeguarding public employees, and that anti-fraud measures must be taken immediately in conjunction with an unrelated budget deficit.

The only fraud here is the Governor. He's tried to cut IHSS funding since the day he entered office. The Assembly passed a "quality assurance" provision in 2004 to ensure that the program ran smoothly, and the county investigations were kicked up to the state, and then the Governor NEVER FUNDED THE NEW POSITIONS for investigators to look over the county referrals. Small wonder a lot of cases with no action ensued.

In the final analysis, the Governor is doing what he has done multiple times in the past - attempting to cheat the needy out of lawful care and services instead of doing the politically unpalatable work of cutting programs. He'd rather reduce costs by making it virtually impossible for enrollees to stay eligible. It's cowardly and craven.

That's our Arnold.

Stimulus Funds Held Back By The Yacht Party Dam

There are two bills likely to come up for vote this week that would allow California to receive billions in stimulus funding, both of which have been subject to Yacht Party obstruction thus far of the Mark Sanford, Sarah Palin variety.

First up is the unemployment benefits extension bill which Republicans rejected last week. There are actually two separate measures, one which would extend benefits and one which would increase the pool of people eligible for those benefits, but the extension is the one that will be voted on as soon as today. Kudos to the SacBee for noting that the Governor has taken no position on these bills, despite the bromance rhetoric about the President and the stimulus.

The Assembly is expected to vote this week, probably today, on a bill that would pave the way for California to extend its lifeline for out-of-work residents by five months at federal expense.

The measure would ensure an extra $2.5 billion to $3 billion in federal funds for emergency benefits at a time when California is mired in recession, with an unemployment rate above 10 percent.

Passage would mean $6,140 in additional benefits for an out-of-work person receiving the state's average benefit of $307 per week. Benefits range from $65 to $475, based on previous income earned [...]

Gov. Arnold Schwarzenegger supports both concepts but has not taken a position on specific legislation, aides said.

Schwarzenegger has "no position" because the Chamber of Commerce doesn't like anything that could lead to higher corporate taxes, and they hold the puppet strings on our last action hero. The vote on this has yet to be recorded in the Assembly, so we shall see what the Yacht Party decides.

The second bill, currently in the State Senate, concerns Medi-Cal eligibility requirements that would open up even more federal funding.

Although California is slated to receive more than $31 billion in federal money, a change in eligibility rules for Medi-Cal made as part of this year’s budget prevents California from qualifying for more than 25 percent of those federal funds.

In order to do so, the state must have the same Medi-Cal eligibility rules today as those in place July 1, 2008.

The problem was caused by an attempt to save $70 million by changing eligibility rules for children receiving care from Medi-Cal was contained in the 85-day record late budget signed by Gov. Arnold Schwarzenegger last September.

Under the change, children must fill out a report every six months confirming their continuing eligibility along with their parents who were already required to fill out such a report prior to the change in law.

Critics of the requirement say that most of the children who lose eligibility do so because they forget to turn in the paperwork, not because they actually lose eligibility. Sorting out such issues increases Medi-Cal costs to counties, who administer the program locally.

To get the federal money, the state must change the law before July 1, 2009 so that kids don’t need to fill out the report. The bill would do that.

Let's be entirely clear - the Administration was banking on oversights from poor families who qualify for Medi-Cal to save the state money. That's borderline immoral and it ought to be addressed. Elaine Alquist is carrying the bill in the Senate, and on this one, Schwarzenegger has seen the error of his ways and promises to sign it. Will the Yacht Party follow suit, or prefer budgeting by forcing bureaucratic red tape on the poor?

Yeah, California Is Still Well And Truly Screwed

There's a very pernicious habit in California of turning away from budget issues once a crisis is averted, in a show of relief that we will at least get a small reprieve from having to deal with the contentious battles for a period of time. This false sense of security is bad enough in regular years, when the budget is cobbled together through borrowing against the future and no long-term solutions are implemented. In this dynamic economic crisis, when rosy outlooks can darken in a matter of days, it's downright foolhardy.

Greg Lucas at California's Capitol has been one of the louder voices in insisting that the budget crisis is not at all over. According to Controller John Chiang, revenue in February was $900 million dollars below estimates. Now, if you extrapolate that out, we'll be in a $10-$12 billion dollar budget hole by the end of the year just if things remain at the same level. This is of course unlikely, as the February national job numbers showed. So much of the tax increases passed in the February 19 budget solution are tied to employment - an increase in the income tax, and sales tax increases that of course rely on residents having purchasing power. In addition, these lean economic times will push more people into needing state services, like unemployment and Medi-Cal. Then there are the counter-cyclical increases and cuts that are working against what the economic recovery is attempting at the federal level.

In addition, many of the spending and taxation decisions made in the recent budget cancel out some of the benefits to California of the American Recovery and Reinvestment Act.

The federal package provides an estimated $13.1 billion in refundable income tax credits for middle to low-income Californians at the same time the state budget includes $12.2 billion in tax increases, only some of which are deductible. And only half of taxpayers deduct.

The federal bill includes a one-time $250 payment to the state’s aged, blind and disabled poor at the same time the state is reducing the maximum grant for an individual by $37 a month, $444 annually.

“California is roughly an eighth of the nation. The impact of this is sufficiently large that it could affect the prospects of recovery for the nation as a whole,” said Jean Ross, director of the California Budget Project, who has been examining how the state’s budget interacts with the federal stimulus package.

The biggest short-term issue is cash. Lucas did an interview with John Chiang where he admitted that we will still need to borrow against the anticipation of future revenue as early as April, to the probable tune of $1.5 billion. Because the budget deal was completed too late to include changes to the income tax code, those revenues will not come in until the following tax year. The sales tax will go up April 1, but that will not be enough to cover expenses.

CC: Is February a big month for obligations?

JC: No. April is the real difficult month. If we don’t get that RAN, we’re $636 million in the red. But then the bigger issue is July. When we walk into the next fiscal year we will need a massive cash infusion.

CC: How come?

JC: We always borrow at the beginning of the year, 25 out of the last 26 anyway and then in April we make up the difference. But this year we walk in with weakness into the next fiscal year. There are less tools in the tool kit. We’ll need a massive RAN or RAW (Revenue Anticipation Warrant).

Remember these last budgets borrow $16.5 billion from (state) special funds to backfill the general fund. So if we have any emergency in the state requiring aid from one of those special fund departments, the state is in trouble. Over 1,100 special funds in the state and we borrowed from over 650 of them. Part of this last budget solution gives us the ability to borrow another $2 billion more. The governor’s budget has us borrowing $11 billion from special funds over the next 18 months.

So we’re going to have to do some outside borrowing for the next fiscal year. Period.

And of course, there's very little anticipation of the worsening economic picture in the budget, meaning that we'll be in unquestionably worse shape by summer. And the cash crisis, forcing short-term borrowing, really impacts selected projects that go out into the bond market, for example infrastructure like the high speed rail project, which will basically have to shut down if there isn't a quick infusion of cash. Keep in mind that California has the worst bond rating in the country and the credit markets are still not that friendly to the state.

Another pressing matter is the determination of how much money from the federal stimulus will be available to the state to fill budget holes. There is a "trigger" in the state budget that would actually reduce some cuts - most of them the worst of the worst, particularly in health care for the needy - as well as reverse increases to the income tax, if at least $10 billion dollars in federal money hits the state budget. It's not just that money comes in, it's that it has to go toward general fund relief in order to contribute to the trigger. And Mike Genest, the Governor's finance director, has a preliminary estimate up showing that the state will come up short. This is insanity. As the California Budget Project noted on a conference call today, there will be many billions above the trigger number available to the state, the legislature need only craft the receipt of that money in such a way to hit the trigger. Otherwise, they are raising taxes and cutting services, and needlessly so. One such bill would change Medi-Cal eligibility requirements to free up as much as $11.23 billion over 27 months. That should happen ASAP. Democrats are trying to write this as a special session bill and ensure that it requires only a majority vote.

The main point here is that we remain in crisis mode with the state budget, and will continue for years upon years until we stop putting off the fundamental, structural solutions the way we constantly do. For example, the prison system remained virtually untouched during the budget crisis, despite being both crippling to the bottom line and unconstitutional in its overcrowding and inability to provide health care. We desperately need structural changes with how the state budgets, and those will only be accomplished by demolishing the conservative veto over the process and repealing the 2/3 rule.

Movement on CA Health Care - Thanks To The Courts And State Agencies

At this point the judiciary is pretty much the only government entity in this state I have a modicum of belief in; they aren't hamstrung by ridiculous rules that make it impossible to function, so they can simply follow the law. State agencies, when properly run, also can exhibit some independence. Lately, there have been several cases ruled in favor of reformers at the expense of malign protectors of the health care status quo.

After a series of investigations from the California Department of Public Health, 18 hospitals have been fined for substandard care.

Violations included an improperly inserted catheter, a ventilator that was not turned on and surgical tools left inside patients after operations [...]

The hospitals were fined $25,000 for each violation - the latest of dozens of penalties the state has issued in recent years to more than 40 hospitals.

"The number of penalties will decrease and the quality of care will dramatically improve as hospitals take action to improve," said Kathleen Billingsley, director of the health department's Center for Healthcare Quality. "The entire intent of these fines is to improve the overall quality of care in California."

As care is improved, so must access for treatment. The proposed cuts to Medi-Cal by the governor would have decimated the ability for the poor to find a doctor. The cuts never made it through district court.

A federal judge has ordered a temporary halt in the state's 10 percent reduction in Medi-Cal reimbursement rates, improving access to care for 6.5 million low-income patients but throwing a new wrench in already difficult budget negotiations.

The U.S. District Court decision forces the state to reimburse most Medi-Cal providers at rates prior to the 10 percent cut, which lawmakers and Gov. Arnold Schwarzenegger made effective July 1 as a cost-cutting measure to help resolve a $15.2 billion budget shortfall this year.

The move increases reimbursement rates the state pays to doctors, dentists, pharmacists, adult day-care centers and other providers who serve Medi-Cal patients. It excludes some hospitals who do not contract with the state and do not provide emergency care.

This just shows the fallacy of a cuts-only budget, which runs into all kinds of voter mandates and constitutional demands. The good news here is that reimbursement rates will be sustained, albeit at a level low enough that half of the state's doctors will still probably reject Medi-Cal patients. The Democratic budget would also have rescinded the Medi-Cal rate cuts.

In a separate decision in the State Supreme Court, the justices ruled that doctors cannot deny care to gays and lesbians based on moral objections.

Justice Joyce Kennard wrote that two Christian fertility doctors who refused to artificially inseminate a lesbian have neither a free speech right nor a religious exemption from the state's law, which "imposes on business establishments certain antidiscrimination obligations."

In the lawsuit that led to the ruling, Guadalupe Benitez, 36, of Oceanside said that the doctors treated her with fertility drugs and instructed her how to inseminate herself at home but told her their beliefs prevented them from inseminating her. One of the doctors referred her to another fertility specialist without moral objections, and Benitez has since given birth to three children.

Nevertheless, Benitez in 2001 sued the Vista-based North Coast Women's Care Medical Group. She and her lawyers successfully argued that a state law prohibiting businesses from discriminating based on sexual orientation applies to doctors.

Of course, we cannot rely on the courts to shape public policy. But they set the boundaries - the lines that lawmakers cannot cross. And those boundaries are leading to increased access and improved care.

Lawsuits, Lawsuits, Lawsuits

There's a confluence of high-profile laswsuits against the state today, on big topics with far-reaching consequences. First, the medical community is suing over Medi-Cal payments:

Doctors, hospitals and health care providers filed a class-action lawsuit Monday seeking to block the state from cutting payments to them for treating the poor.

The lawsuit argues that an upcoming 10 percent rate cut to Medi-Cal -- the state-run health insurance program serving 6.5 million low-income residents -- will exacerbate a shortage of doctors, dentists and pharmacists willing to treat poor patients because payments are so low.

"Medi-Cal already doesn't cover the cost of providing care," said Dr. Richard Frankenstein, president of the California Medical Association, which led the lawsuit. "If these cuts take effect, Medi-Cal patients will be forced to seek care in already overcrowded hospital emergency rooms, which undermines access to care for all Californians."

The suit, filed in Los Angeles Superior Court on Monday, seeks an immediate injunction to block the reduction from taking effect July 1.

San Francisco mayor Gavin Newsom has been at the forefront of criticizing these payment cuts, and when he talked to bloggers at the CDP convention he predicted this lawsuit would be successful. The future of emergency room care and Medi-Cal really hangs in the balance: if the payments are inadequate, hospitals and doctors might turn these patients away, straining the ER system and increasing the crisis in health care access.

In a separate lawsuit, a taxpayer group is suing to block $12 billion in prison construction bonds.

Even though the state is facing a $20 billion dollar deficit and our high schools, colleges, universities, health care facilities, and food banks alike are threatened with billions of dollars of reduced funding, the Governor and our Legislative leaders want to build 53,000 new prison and jail beds. We already have 170,000 prisoners in California. We don't need more prison beds -- we need sentencing reform and better support in the community for recovering drug addicts, people with mental illness, and parolees.

That's why we are filing our lawsuit today to stop the Governor from borrowing $7.4 billion in lease revenue bonds to build new prison beds, at a total cost of over $12 billion including interest payments. Operating these new prison beds will cost at least $1.5 billion each year, or a staggering total of $37 billion over the next 25 years. Our lawsuit argues that the $7.4 billion in lease revenue bonds violates the requirement in the California Constitution that all significant long term debts be approved by the voters. The lawsuit aims to force the state to ask its voters whether they want to build the 53,000 prison and jail beds proposed in AB 900. The New York Times has dubbed AB 900 as "the single largest prison construction program in the history of the US." Not only is AB 900 a tremendous waste of government resources, it also threatens the very premise of democracy by shutting voters off from their constitutional rights.

Desperate times call for desperate measures. And considering that a year after passage of AB 900, not one bed has been constructed, I'd say that this is a money pit and taxpayers need to step in to stop the digging. We have better solutions in the way of sentencing reform, and while Democrats in both chambers of the legislature play politics over which sentencing bill will become the primary one (Sen. Romero's clearly should, IMO), the crisis grows. And given that these construction bonds are little more than a boondoggle, California will probably end up following the lead of several states and release a mass of inmates early. There are real solutions to be had here, but pissing away $12 billion dollars is not one of them.

As if the state didn't have enough problems...

Arnold's Secret Plan To End The Deficit

Yesterday I noted how the Governor is trying to lower the Medi-Cal rolls by increasing the paperwork for enrollees and hoping that they'll get tripped up by the process. This is officially a trend.

Midnight on March 1 -- Saturday -- recently became the deadline for students to apply to seven Cal State campuses that traditionally accepted applications months later. An even earlier deadline, Feb. 1, has already passed for 16 other Cal State campuses

The root cause of the time crunch is a multibillion-dollar state deficit. In his provisional budget for next year, Gov. Arnold Schwarzenegger set Cal State's share of reductions at $386.1 million. If that figure holds, schools have much difficult budget-cutting ahead. As a precaution, Chancellor Charles B. Reed limited the number of students by shortening the application period.

"An effort was made to try to slow down what was otherwise going to be a record year in enrollment," said Jim Blackburn, director of enrollment management services in the chancellor's office. Blackburn did not know of another time when Cal State sought to curtail students in this fashion. He noted, however, that campuses frequently stop reviewing new applications when they reach enrollment thresholds. The priority application period ended Nov. 30, which was the deadline for Cal State Long Beach and four other especially popular schools. Three other campuses would have closed by Feb. 1 regardless.

What we have here is a coward of a Governor, who instead of cutting programs wants to throw up sneaky barriers to entry in an effort to take the blame away from himself and toward those who need the services. It's about as scummy as you can get. Frank Russo shares my disdain.

Is this what the great state of California is coming to? I thought, apparently naively, that we celebrated and cherished the desire of our young wanting to further their education and attend institutions of higher learning. Instead, because of the budget proposed by Governor Schwarzenegger for next year, and difficulties the California State University (CSU) system expects to have with cut backs, they are, with premeditation (but propbably without malice aforethought) advancing the deadline for applying and hoping that many students miss the deadline.

Now we see the "Year of Education" and the "Year of Healthcare" turned into the "Year of Changing Paperwork and Deadlines So We Can Kick People Off Education And Healthcare." The Legislative Analyst has already deemed the Governor's budget unworkable. I wonder what she'll say about these latest efforts.

Time To Play: You're The New York Times Editor!

So, let's see. You're the New York Times. You're a national paper, but you have a significant readership in California, so you want to cover the Left Coast every now and again. You're not on the ground in California, but you have a few reporters hither and yon, and press releases a go-go from the Governor's office. There's a space in the paper for a California story, something that can show to the world the innovation and forward-thinking at work in the nation's largest state. So you look over what they've done for the last few days.

On the one hand, the Governor, just months from failing in a quest to massively expand health care to millions of uninsured Californians, has decided to go in the complete opposite direction and force Medi-Cal enrollees to fill out all kinds of paperwork in the hopes of knocking thousands off the rolls to save money.

Administration officials expect the rule will result in 122,000 people being dropped from the rolls next year, saving the state $92 million - money that the governor's staff has already counted against the state's deficit.

The plan calls for about 4.5 million of the 6.5 million enrollees of the Medi-Cal program to file eligibility forms with the state four times a year. Under existing law, children, some disabled people and pregnant women must reapply once a year, while parents are required to report twice annually.

The chore of filling out a form and sending it to regulators might sound simple enough, but for Medi-Cal recipients such as Ernie Campbell of Novato, who has hemophilia, the danger of losing coverage because of an unanticipated problem, such as a form being lost or delayed in the mail, is a serious one.

"The renewal process is already a lot of paperwork and they warn you if you don't get everything in on time you could lose your coverage," said Campbell, 31. "I think this could probably affect me pretty negatively."

Sounds like something you'd want to cover. You know, the story has an arc and some drama, with a callous Governor claiming the mantle of universal health care in public and trying to cast off the sick and the poor in private.

On the other hand, there's this somewhat meaningless move to create a cabinet-level position for volunteerism, an effort to outsource normal government functions, and let them rise and fall on volunteer efforts. Seems like not much of a program at all, and certainly of less importance to everyday Californians than this plan to purge the Medi-Cal rolls. Anyway there are plenty of volunteer organizations that perform these functions all the time.

Of course, The Times went ahead with the volunteer story.

Under the change, the governor’s commission for volunteerism, California Volunteers, will maintain its staffing and budget. But its executive director will gain expanded duties as a cabinet secretary, playing a role in disaster-related planning and response efforts and coordinating volunteers at disaster sites.

The office will also manage donations that flow into the state for disaster relief, a responsibility now held by the state’s Office of Emergency Response. It is the first time a governor’s commission overseeing federal money to manage volunteers — panels required by law since 1993 — has been elevated to a cabinet role.

Really no change at all, aside from a change in the faceplate on somebody's office door.

But that fit the narrative of the "Governator is teh awesome" much, much better. So off it goes to the front porches of all the Grey Lady's readers.

And some people blame the 2006 election loss on Phil Angelides. Ho-kay.