Prison Health Care Deal Finally Reached

Prior to yesterday, the buzz around the federal prison health care receiver was that he spent half a billion more than budgeted in 2008-2009. As Clark Kelso explained, these were overcharges for out-of-prison hospital care. Because the facilities are so lax and because the proposed money Kelso has consistently sought hasn't arrived, prisoners with medical issues often must be sent offsite. "There's a lot [of inmate care] that does have to be sent out [...] because we don't maintain that level of care within the prison."

That was a message statement. He was essentially saying "and I'll keep going over budget if you don't build the facilities needed." Interestingly enough, the very next day both sides floated a deal that would cut back the amount of prison hospitals to be built, but finally, actually build them.

State corrections officials and the prison system's medical care receiver said Thursday they have reached the outlines of an agreement to build two new long-term health care facilities for inmates at a cost of $1.9 billion.

If the two sides can craft the memorandum of understanding that they say is imminent, it would represent a significant step toward ending the federal oversight of prison medical care in California that has created a constitutional crisis over the past year.

"That's certainly something I believe we can finalize with this deal," federal receiver J. Clark Kelso said in a joint telephone press conference with the California Department of Corrections and Rehabilitation Secretary Matt Cate [...]

The facilities would house 3,400 inmates and be bond financed – possibly without having to be approved by the Legislature, according to Cate.

Originally, Kelso had sought a 10,000-bed set of facilities costing $8 billion, so this is significantly cut back. However, it makes some sense if it is accompanied by a reduction in the overall prison population, thus requiring less health care infrastructure. The point that Kelso finally got across is that we can keep delaying and delaying and go massively over budget every year to meet Constitutional responsibilities, or we can build the damn facilities. This looks like a loss for Kelso, but it's a win.

Bonds for infrastructure are at least somewhat inoffensive, but they need to be issued. AB 900 bonds to build more prisons never got issued two years after being approved.

Governor Hoover's Plan To Weed Out The Sick

I just appeared on KPFA with Eric Klein to talk about the Governor's proposed budget cuts, along with several experts and stakeholders, including friend of Calitics Anthony Wright of Health Access California. I agree with him that it's almost hard to fathom the amount and severity of the cuts proposed for health care, especially at a time with the federal government is moving forward with a "do or die" plan to reform the health care market, increase access and lower costs. The proposed Governor Hoover cuts would have the exact opposite effect, and the people gravely impacted by this will not have the luxury of waiting around for the Feds to catch up and fill in the gaps.

Two recent CBP fact sheets help break down the Governor’s proposed cuts to Medi-Cal and Healthy Families, in numbers that are easier to grasp. These fact sheets show:

More than 940,000 California children would lose health coverage if the Healthy Families Program is eliminated as the Governor proposes. More than 240,000 children in Los Angeles county alone would be affected. Want to know how many children would be impacted in your county? Check out the fact sheet to see.

In total, more than 1.9 million Californians could lose access to health coverage within three years through proposed reductions to the Medi-Cal Program and elimination of Healthy Families.

As the Governor said himself today, “behind every one of those dollars that we cut there are real faces.”

Kudos to the LA Times, by the way, for allowing the great unmentionable to get printed on their pages - the decisions made in Sacramento will truly be the difference between life and death for many Californians.

Schwarzenegger argues that the state's declining economy and plummeting tax revenues have boxed California into a corner, forcing deep and historic cuts in the health and welfare programs that form the state's social safety net. Without those tough measures, he says, California will cartwheel toward insolvency.

But a 10-person legislative budget panel, which is reviewing the governor's proposals, listened during a long day in a crowded hearing room to scores of people who said their survival depends on programs set to be hit by the budget ax.

They heard from mothers of children with autism, representatives of people on dialysis, poor parents whose children see dentists on the government's dime, former drug abusers set straight by a state rehab program.

And they heard from a woman named Lynnea Garbutt who has lived with AIDS all of her 24 years.

She has survived with the help of a state program that provides the expensive antiviral drugs she takes. Now, with that program facing elimination, she pleaded with lawmakers to save it -- and her life.

"If these cuts take place, you're not just cutting money from the program -- you're cutting my life," she told the panel, her voice shaking and tears falling. "I choose to live. Please don't make me die. My choice is life."

This is how Yacht Partier Chuck DeVore responded - move out of the state. Love it or leave it!

The cuts made to programs like Healthy Families (California's SCHIP) would eliminate federal matching funds and double or triple the scope of the cuts. And it would be one thing, by the way, if the Yacht Party simply held the line and said "we can't afford it." But no, they want to spend billions of dollars, only on their own projects instead of saving human lives.

In this article in the San Diego Union Tribune, the same Republicans (and Republican governor) who would eliminate children's health care and basic services for the neediest Californians, actually want the state to pony up the money for a water bond.

Schwarzenegger, says the article, is still fixated on a whopping $10 billion bond. And Senate Republicans are right there with him:

"Sen. Dave Cogdill of Modesto, the lead Republican on water issues, agreed. “It's obviously a tough time to bring it forward, but we can't wait,” the article notes.

We can't wait? According to my calculator, If the entire $10 billion was sold together, the interest payment could be in the neighborhood of $660 million annually. That's $660 million more that would have to come out of schools, health care, and other items on the chopping block.

Similarly, the Yacht Party cried poor about programs that help people, but made room in the February budget for a huge corporate tax cut.

Everyone who has spent 10 seconds on this recognizes that there's no good way to use current revenues to provide the basic level of services Californians deserve. To the extent that I have hope that we will overcome the selfishness of the cruel and the impossibility of navigating a broken system, it comes from people, who are fed up and starving for leadership and change from a government that no longer serves their interests. To turn the figurative starvation literal, Los Angeles teachers are going on a hunger strike to protest budget cuts. We're all hungry, and we'll be a lot hungrier if Governor Hoover has his way.

The California Bailout - Not Enough, Won't Help

The economic recovery that is currently being bandied about in Congress, particularly in the House, would deliver $4.5 billion dollars for infrastructure projects to California. That's 10% of overall infrastructure spending, which is in line with our population, but the overall pot for infrastructure is too small nationwide, and that kind of relief is not enough to make a dent in the budget nightmare. The fact that money for tax cuts designed to snare Republican votes is crowding out infrastructure spending and job creation contributes to this, but the other problem is the deteriorating nature of our infrastructure, which could cost half a trillion dollars to fix properly. All that money doesn't have to come from the Feds, but with the bond markets unwilling to deliver for California until a budget solution is made, $4.5 billion over two years is a drop in the bucket, and the problem will grow worse. This shows why floating bonds is a horrible way to fund government.

The report cites California’s dependence on bond financing as a chief reason the state can’t meet its infrastructure financing needs. California has increasingly used borrowing through state general obligation bonds to finance infrastructure projects. But the need for infrastructure investment far exceeds the capacity of these bonds, according to the report, Paying for Infrastructure: California’s Choices. Years of declining investment have left the state with crumbling classrooms, congested roads, and an aging levee network that puts many homes and businesses in harm’s way. Problems in the government bond market are making it more difficult to sell the bonds already authorized, and in the long term, large projected budget shortfalls will limit the state’s ability to rely on these bonds to meet California’s future needs.

We can of course see this right now, and the effects are widespread. With the bond markets frozen, environmental projects all over the state have to be shut down, having a very real impact on the environment and public health. Forget the more innovative projects we'd all like to see strengthened with fiscal investment - like the growth of the solar industry and even wave harvesting, the type of green jobs that can save our economy - we're not even going to be able to clean the ocean this year.

If swimmers in Santa Monica Bay bump into trash or bacteria this summer, one culprit will be California's budget impasse.

Hundreds of millions of dollars worth of voter-approved projects have been halted because of the state's financial problems. That includes $12 million that the Santa Monica Bay Restoration Commission was counting on to prevent dirty storm water and filthy runoff from draining into the bay.

"People expect to be able to enjoy the beach and not come home sick," said state Sen. Fran Pavley (D-Agoura Hills), chairwoman of the state Senate Water and Natural Resources Committee.

The money freeze has immobilized construction of new biking trails along the Santa Ana River in San Bernardino and Orange counties. It has stopped plans to tear down the Matilija Dam in Ventura County and restore the sediment-filled Matilija reservoir. It has impeded efforts to boost the populations of salmon and steelhead trout off the coast of Los Angeles and Ventura counties.

These are not small inconveniences. A new report from Brigham Young University scientists shows that cleaner air, for example, has a direct effect on increasing the lifespan of a population. There is a cost to bad borrowing. If we can't fund infrastructure, the ports and the oceans don't get cleaned. Smog reduction projects may shutter. The air gets dirtier. And you die three years earlier.

California's delegation needs to push for General Fund relief in the recovery package, as well as federal guarantees for our municipal bonds, which would frankly jump-start projects faster than anything. If it's good enough for the banks, it should be good enough for California.

UPDATE: OK, the CBPP has a more comprehensive report, and the numbers are much more in line with current needs. They predict that California will get $11.1 billion in increased Medi-Cal spending, and $7.8 billion from a new State Fiscal Stabilization Fund, in addition to the infrastructure spending. That approaches $20 billion over the next two fiscal years.

Now THAT'S better. A fiscal stabilization fund in particular is a great idea.

CA Prison Crisis - State Gets 30-Day Reprieve

The judges are bending over backwards to not do what they'll eventually have to do - cap the prison population because the failed leadership in Sacramento can't and won't arrive at a solution. Today they granted another 30-day extension:

Acceding to pleas for more time, three federal judges agreed to give the state an additional 30 days to reach an agreement for reducing the overcrowded prison population and avoid a trial that could lead to a mass release of inmates.

If no agreement is reached, the judges said, the trial will begin in November.

So, to recap - the state had months and months to settle with the prison advocates seeking to end overcrowding. It didn't happen, their "let's build our way out of it" approach hasn't led to the construction of one more bed, and they begged for time. The federal receiver asked for billions to make the prison health care system up to some sort of reasonable standard beyond what you'd find in a gulag, Senate Republicans killed the bond proposal and now this will either become another expenditure in the general fund or another reason for the judges to mass release. There is a way to admit nonviolent offenders into treatment programs and rehabilitation and work release but nobody wants to pay for it. And so the system is literally imploding on itself, because nobody will lift a finger to fix "ToughOnCrime" sentencing guidelines that are completely unsustainable and counter-productive.

Awesome, ain't it?

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...

Revenue Solutions Even Dan Walters Can Live With

I think it's notable that the budget gap is so wide this year that the SacBee's house conservative Dan Walters felt the need to actually come up with a proposal himself rather than carp and gainsay everyone else's. That alone shows you the gravity of the situation and the wideness of the budget hole. And I have to say, I think Walters came up with some half-decent ideas, or rather bit off some of them from elsewhere:

We devote too much money to prisons, with eight times as many inmates and 20 times as much spending as when we launched California's massive prison-building program a quarter-century ago. Schwarzenegger is on the right path in suggesting the release of low-security inmates, especially those with drug problems, into treatment and transition programs. Spending $40,000-plus per year to keep a drug addict or a geriatric inmate in prison is ludicrous.

We spend too little on K-12 schools, and we spend it badly. We should raise per pupil spending to at least the national average, which might cost $4 billion to $8 billion more a year. We should also eliminate or consolidate billions of dollars in so-called "categorical" programs and redirect funds toward the kids and schools needing them most and toward proven educational strategies [...]

We should expand Hill's modest recommendations on tax loopholes, ruthlessly closing those whose only bases are political pull or bad habit, to finance what we really need and/or reduce overall tax rates to encourage economic investment.

A $10 billion-plus loophole-closure effort would be justified. But to overcome special interest resistance, we may need an independent commission, such as the one Congress created to close unneeded military bases. While we're at it, we should rework the tax system to align it with the real economy, such as extending sales taxes to services and reducing the sales tax rate [...]

Finally, we should stop financing infrastructure with bonds to be repaid from a deficit-ridden general fund. We should raise gas taxes, impose levee improvement fees on property owners and bill water users for the costs of supplying their needs.

Mostly, we should accept the reality that there's no free lunch and if we want something from government, we must pay for it.

I excised the more dodgy ideas about increasing student fees on four-year colleges and reining in "out-of-control" public pension obligations. But there's a decent amount of common sense here, and it brings into balance the conversation needed about the budget by focusing on services instead of taxes, at least as related to education and water and infrastructure improvements. The day that a conservative writes "we should accept the reality that there's no free lunch" is a rare day indeed.

At the same time, there's a lack of focus here on economic growth and in more innovative budget solutions that would make California a proper 21st-century state. Judy Chu's proposal to apply the sales tax in the same manner as New York, Texas and Florida would wipe about $10 billion dollars off the books at the drop of a hat. The services in question, including health club dues, landscaping, and taxidermy, are in general utilized by the higher-income residents of the state, and thus the taxation will be somewhat progressive. Moreover, the services California could provide would have a substantial economic impact to practically everyone who lives here.in

Budget Follies

"Budget Nun" Elizabeth Hill's pessimistic report about Governor Schwarzenegger's budget stressed the need for more revenue to close the $14 billion dollar gap and maintain a professional level of services. But if the money boys on Wall Street are to be believed, even that $14 billion dollar shortfall represents a number borne of outsized optimism.

Deep spending cuts proposed by Gov. Arnold Schwarzenegger last week were followed yesterday by more bad news – a Wall Street firm placed the state's bond rating on “negative watch” amid fear that a $14.5 billion budget shortfall could get bigger.

The governor's budget is based on data from November and early December that assumes tax revenue will grow 2 percent next year. But in recent weeks, some economists have begun to warn that the economy may slide into a recession, which would shrink tax revenue and widen the budget gap.

Fitch Ratings placed California's bond rating of “A+,” already one of the lowest ratings of any state, on “negative watch” because of lawmakers' inability to close a chronic budget gap and revenue forecasts in the governor's budget that may be outdated.

By the way, the bond rating becomes slightly more important when you finance the government by, you know, floating bonds. Boy, do we ever need a governor with a strong fiscal background to ensure our bond rating doesn't go to crap! Where d'you think we should get one of them? Do we need another recall?

What choice did I have but to reach for the phone and dial three ringleaders from the 2003 recall of Davis? [...]

Ted Costa, the anti-tax crusader and the man who drafted the Davis recall petition, was on the horn right away.

"We've got to get it going again," I told him.

Costa seemed confused.

The recall, I said. The recall.

All the same conditions are there again, I told Costa, and there has to be another "throw the bum out" campaign.

"There probably should be," Costa agreed, warming to the idea.

(that article is hilarious.)

The point is that if you have to use creative accounting just to get to a $14 BILLION dollar loss, something is fundamentally wrong. And cutting spending is not going to produce a satisfactory solution. For one, it will result in forfeiting $1.5 billion dollars in federal matching funds, doubling the real-world impact on Californians. For another, it will not make up for shrinking revenues that will necessitate more cuts, and on and on. I know that the Governor, and really the whole Legislature too, has a speech impediment where the word tax comes out sounding like the word fee. But fixing the revenue side is unavoidable, and Sacramento is not a movie set. Welcome to reality, Governor.

Robbing From The Voters

Last night on Warren Olney's Which Way LA?, which everyone should be podcasting, Dan Walters from the Sacramento Bee made a very interesting point about the budget that has been somewhat unremarked-upon to this point. I'm not generally a fan of Walters, but it's hard to argue with this.

The budget that passed the Assembly took $1.2 billion designed to go to transit and put it back into the general fund, with the reason given that the infrastructure bonds are financing transit improvements so there would be some duplication there. That's not what voters approved in November at all. Not even close. The infrastructure bonds on transportation were meant to be additional funds that the state could use to start new projects. It was in no way meant to stand in for the regular finances received from the state regarding transportation.

So we now have a situation where bonds have been floated to finance existing projects and maintenance. Is this a preview of things to come, a get-out-of-the-deficit-free card by using Arthur Andersen-style creative accounting tactics? Voters approved those bonds because they wanted to see new mass transit options and new carpool lanes. They did not approve an addendum to the state budget to solve the fiscal mess.

(We of course see this also in the cut to Prop. 36 funding for drug treatment in prisons, also approved by voters, which I guess doesn't matter. It's a good thing nobody covers this state in the media, or there would be some howling going on)