Budget Conference Committee Adjourns

Last night, the Budget Conference Committee adjourned shortly after 11:00 pm, concluding their work to reconcile the Senate and Assembly versions of the 2017-18 Budget. The Legislature reached agreements to:

• Adopt the Governor’s revenue estimates with the exception of using the LAO’s property tax estimates;
• Increase funding for after-school programs;
• Restore adult dental and optical services under Medi-Cal;
• Expand the state’s earned income tax credit for low-income working families;
• Adopt a $387 million dam safety and emergency response package; and
• Reject Assembly’s $400 million Affordable Housing proposal.

A few outstanding issues remain, including Cap and Trade, the allocation of Proposition 56 – Tobacco Tax revenues and Cannabis trailer bill language (though not addressed in Conference).

The full budget committees are expected to hear trailer bill language on Tuesday, June 13. The deadline for a budget to be adopted by the Legislature is Thursday, June 15. Additional Budget Conference Committee highlights are provided below.

Proposition 56 – Tobacco Tax Revenues

As mentioned above, no agreement was reached on how to allocate the $1.3 billion in Prop. 56 revenues. Key differences between the Senate and Assembly’s investments Prop 56 revenues can be found here. The allocation of tobacco tax revenues is a point of contention with the Administration, who proposed to use these revenues to offset costs to the Medi-Cal program and particularly the increased state share of the expansion population. The Administration noted the need for fiscal prudence, continuing conversations and technical language issues that would need to be addressed.

Restoration of Optional Benefits

While the restoration of full adult dental benefits and optical benefits under Medi-Cal were discussed in the context of Proposition 56 allocations, the Conference Committee took bipartisan action to fund these restorations using General Fund. The Conference Committee approved $34.8 million in FY 2017-18 and $73 million ongoing for the restoration of adult dental benefits beginning in January 1, 2018. Additionally, the Conference Committee approved $12.5 million in FY 2020-21 and $26.3 million ongoing for the restoration of optical benefits.

Other key actions are noted in the table below: