California Could Lose $2 Billion of Budget Surplus Due to Feud With Trump

California is bracing for a much smaller budget surplus next year because of its ongoing feud with the Trump administration about a tax involving Medicaid, one of the state's chief budget writers said Monday.

California is projected to have a $7 billion surplus, with $3 billion of it available to spend on recurring programs.

But nearly $2 billion of that amount would only come if California is allowed to keep in place a tax on the companies that manage Medi-Cal, the state's Medicaid program. California needs permission from the federal government to do that — and state lawmakers are not sure they will get it.

Democratic state Assemblyman Phil Ting, chairman of the committee that writes the Assembly version of the budget, said lawmakers are planning on Trump declining to approve the tax, meaning only $1 billion of the surplus would be available to spend on recurring programs.

Preparing to spend that money while facing such uncertainty “wouldn't be the right thing to do,” Ting said.

“Every time there is an opportunity to fight with California, the Trump administration has really taken up that mantle and really tried at every turn to thwart many of our key policy agendas,” Ting said.

Sen. Holly Mitchell, chairwoman of the state Senate Budget Committee, said it was too early in the budget process to make such decisions. Gov. Gavin Newsom must send his budget proposal to the Legislature by Jan. 10. After that, the Legislature has until June 15 to pass it.

Mitchell said the Trump administration is more likely to oppose the tax if California's legislative leaders publicly say they are planning on that outcome.

“That's not a public statement I would have made today, personally,” Mitchell said. California has other issues in the works with the Trump administration, and the Legislature should be “strategic and smart” in its approach to the federal government, she said.

California has battled with the Trump administration this year over whether the state can set its own emission standards for cars and trucks and over proposed new rules governing the state's water. Democratic Attorney General Xavier Becerra has sued the administration more than 50 times over various administrative actions.

Ting's comments came as he released his annual blueprint for upcoming state spending. Ting said he wants the state to spend more money on mental health treatment for homeless people and prison inmates. He also wants the state to let low-income adults 65 and older who are living in the country illegally be eligible for the state-funded health insurance program.

Ting indicated it could be difficult to accomplish all of those things if the state only has $1 billion in new money that lawmakers can spend on recurring programs.

“A billion dollars goes really quickly when you're talking about higher education, health care, housing the homeless,” Ting said.

This post has been updated.