Legislators Tackle Transportation, Health Care Funding in Special Sessions

The state budget may be cooked, but discussions over how to fund two of the state's most important government services -- health care services and transportation -- are just heating up in Sacramento.

As he unveiled a $167.6 billion budget deal for the fiscal year that began July 1, Gov. Jerry Brown also announced two "extraordinary" legislative sessions. Brown wants lawmakers to figure out how to pay for repairs to the state's dismally underfunded roads, bridges and highways, and how to make up for a $1 billion hole in the state's Medi-Cal program that will appear next June.

He's also asking the Legislature to come up for more funding to pay for higher Medi-Cal rates paid to doctors, to boost services for the developmentally disabled and to pay for an expansion of in-home care for disabled adults.

In announcing the special sessions -- which are limited to those specific subjects and run at the same time as normal legislative business in Sacramento -- Brown said he wanted to separate the two issues from broader budget discussions "so we can really deal with (them) in a thoughtful way."

"We have to find more resources for our health care and also for our roads and bridges, so there's plenty to do," he said on June 16 in a state Capitol news conference. "This is difficult, it involves both Republicans and Democrats ... and one way or another we have to find some solutions."

Lawmakers of both parties agree that the issues at hand are important. Where they disagree is on how to  pay for them: Republicans are loath to raise taxes for anything, and believe that all of this should have been dealt with through the normal budget process. (By contrast, Brown and Democratic lawmakers seem happy to push any tax discussions away from the deadline-driven budget discussions.)

But in order to raise taxes, Democrats will need some Republican votes.

Assembly Republican Leader Kristin Olsen (R-Modesto) said the minority party stands ready to engage but isn't thrilled with the process.

"We are very disappointed," she said. "Here we passed a state budget just two weeks ago, and all the issues in these special sessions -- transportation and health care -- should have and could have been addressed at that time."

Transportation Needs Staggering

State officials say California's 50,000 miles of highways and nearly 13,000 state-owned bridges have racked up $59 billion worth of repair needs, after years of declining funding. Annually, they peg that shortfall at about $5.7 billion -- in part because gas tax revenues have sharply declined as cars become more fuel-efficient.

Democrats say they need to figure out a way to replace that declining revenue. Assembly Speaker Toni Atkins (D-San Diego) rolled out a $2 billion annual proposal in January that calls, in part, for a "road user fee" that her office says would cost most drivers around $52 a year. State Sen. Jim Beall (D-San Jose), chair of the Senate's transportation committee,  wants to raise around $3 billion a year with a mix of increases to the gas tax, the vehicle license fee and vehicle registration fee. He also wants to charge the owners of zero-emission vehicles $100 a year to use the roads, an idea that Brown's administration has flatly rejected.

Olsen and other Republicans say they can find that funding without raising a cent of new taxes. Assembly Republicans unveiled their $6.6 billion annual plan last month, which includes some items the majority party is unlikely to back. Among those provisions: Taking money from the state's cap-and-trade program aimed at climate change; redirecting $1 billion a year from the state's general fund; laying off 3,500 Caltrans workers whose positions the nonpartisan Legislative Analyst's Office has suggested are redundant; and eliminating one-quarter of state government's currently vacant positions.

Olsen rejects the notion that the GOP's plan could be untenable to Democrats, saying the Republican caucus worked hard to find a "realistic, credible plan."

"We do not need to raise taxes on hardworking Californians to pay for transportation needs," she said.

Health Care Funding Drying Up

Like the gas tax, another key funding source -- a tax levied on the health plans that manage Medi-Cal -- is also drying up. That tax, which nets $1.1 billion a year to help provide care to one-third of the state's residents, will no longer be allowed under federal rules come next June. The federal government wants the state to assess a more broad-based tax that impacts health plans other than just Medi-Cal.

But Brown has also rolled a few other hot-button issues into this special session: The ongoing debate over Medi-Cal reimbursement rates; the shortfall in developmental disability service funding created by cuts made during the depth of the recession; and increasing funding for the state's in-home care program for the blind, disabled and elderly. In the budget he signed last month, Brown included a one-year restoration of cuts made to in-home supportive services during the recession, but said that the Legislature needs to figure out a long-term funding stream to make that 7 percent boost permanent.

Olsen said Republicans are still studying the health care issue but reiterated their opposition to raising taxes "for priorities that should have been covered in the budget."

The special sessions began last month, and informational hearings have already begun -- but the hard work isn't expected to begin until late August.