This week, the Assembly Budget Committee and the Senate Budget & Fiscal Review Committee each convened overview hearings to examine the Governor’s 2020-21 proposed budget. The full committee hearings held on Tuesday and Wednesday this week marked the first hearing events of the months-long budget process that will occur through June as budget subcommittees are expected to begin scheduling hearings over the coming weeks on specific proposals included in the Governor’s budget.
During the Assembly and Senate hearings this week, committee members received a high-level presentation of the Governor’s proposed investments from Vivek Viswanathan from the Department of Finance (DOF). DOF discussed major components of the Governor’s budget, including in areas of budgetary reserves, early childhood and education, health, housing and homelessness, criminal justice, and climate, among other topics.
For both hearings, Legislative Analyst Gabriel Petek briefed committee members on the overall Governor’s budget structure, key choices for legislators to consider during the budget process, and the current budget condition and multiyear fiscal outlook. Petek indicated that both the Legislative Analyst’s Office (LAO) and DOF had nearly identical revenue estimates with less than 0.1 percent difference between the two. Petek further noted that over 95 percent of the proposed investments by the Newsom Administration are less than $100 million each. Of the available surplus, much of the one-time allocations are proposed to be placed toward housing and homelessness; ongoing surplus investments are slated to be placed toward health care and higher education.
Looking across the budget forecast period, the LAO warned legislators about the potential for decreasing surplus amounts and a reliance on a number of uncertain factors, including continued strong economic performance, federal approval of the managed care organization (MCO) tax, and suspension of various programs in 2023-24. The LAO recommended that the Legislature consider whether the total level of reserves set aside in the Governor’s proposed budget are satisfactory and whether the state’s operating surplus should be increased, particularly over the forecast period.
Committee members in both the Assembly and Senate had the opportunity to query DOF and LAO representatives about the Governor’s proposed investments and the state’s overall economic condition. Assembly Budget Committee Chair Phil Ting and Senate Budget & Fiscal Review Committee Chair Holly Mitchell, along with other committee members, applauded the Newsom Administration’s focus on housing and homelessness which includes an initial state investment of $750 million for rental subsidies, housing units, and board and care facilities. Other inquiries and areas of note were centered around the Governor’s proposed investments in wildfire and emergency preparedness, the creation and consolidation of new state departments (including the proposed Department of Early Childhood Development and the Department of Cannabis Control), and criminal justice reforms.
In the health arena, several committee members from both the Assembly and Senate inquired about the outstanding federal approval of the MCO tax and its associated budgetary impacts, proposed investments and actions related to prescription drug costs, and behavioral health and Mental Health Services Act (MHSA) reforms. Notably, Senator Pan, who chairs both the Senate Budget & Fiscal Review Subcommittee No. 3 on Health & Human Services and the Senate Health Committee, honed in on the Newsom Administration’s proposal to extend by 18 months a suspension of various health and human services-related investments that were made in the 2019 Budget Act. Pan also briefly discussed the Newsom Administration’s Medi-Cal Healthier California for All (formerly CalAIM) to drastically transform the state’s Medi-Cal delivery system.
On the Assembly side, Assembly Member Joaquin Arambula, chair of the Assembly Budget Subcommittee No. 1 on Health and Human Services, discussed the importance of care coordination and wraparound services under the area of the Administration’s Medi-Cal Healthier California for All (CalAIM), as well as the expansion of full-scope Medi-Cal benefits to undocumented older adults. Further, Assembly Member Jim Wood, chair of the Assembly Health Committee, inquired about the lack of detail on health-related proposals in the Governor’s budget, including those related to prescription drug costs and healthcare affordability. In response to Wood’s inquiry, DOF representatives indicated the Administration continues to flesh out details on the expansive proposals and is aiming to provide more information this spring.
As a reminder, CHEAC’s January Budget Memo, which provides a summary of key areas of interest to local health departments, is available here. Budget subcommittee hearings and actions will be reported through our CHEAC Weekly Update and additional information and position letters from CHEAC will be posted throughout the budget process on our website here.