California voters reject budget fixes

California lawmakers are considering further cuts to the state's budget -- including health services -- after voters turned down a plan to trim the budget deficit.

Voters on May 19 rejected -- by 2-1 ratios -- five of six ballot measures that would have raised nearly $6 billion and kept the state's fiscal 2010 budget deficit at $15.4 billion. The five rejected measures would have extended certain state sales and income taxes by two years, restricted education funding, borrowed money against the state lottery, and redirected tobacco tax revenues designated for childhood development toward Medicaid and other uses.

The California Medical Assn. supported three of the measures that failed.

But 74% of residents approved the sixth referendum, which prevents state elected officials' salaries from increasing when the state faces a budget deficit.

California Gov. Arnold Schwarzenegger said on May 14 that he planned to ask for trims in health and human services spending, including a 10% cut in Medicaid fees for certain private hospitals, no matter how the voters ruled on the ballot issues. California Hospital Assn. spokeswoman Jan Emerson said such cuts would affect 76 private hospitals in the state -- out of 430 hospitals in all -- that care for significant numbers of Medicaid and uninsured patients. "These hospitals are already financially distressed," she said.

Schwarzenegger said voter rejection of the ballot issues would force him to consider cuts in HIV education and prevention programs, child welfare services and other areas. Schwarzenegger and state lawmakers sought to reduce Medicaid fees by 10% in 2008 for physicians and others caring for Medicaid patients, but lawsuits by medical associations and other groups of health professionals have led courts at least to delay the cuts.

California Academy of Family Physicians President Tom Bent, MD, called on Schwarzenegger to protect the most vulnerable citizens by maintaining their health coverage. "The public's rejection of the ballot initiatives is not a mandate to decimate state-funded health and human services," said Dr. Bent, medical director and CEO of the Laguna Beach Community Clinic in Orange County.

The Democratic leaders of the California Assembly and Senate said voters rejected the ballot measures because they didn't understand them. Californians want state lawmakers to resolve the budget deficit, said Senate President Pro Tempore Darrell Steinberg. "The people are telling us, 'Don't bring this problem to our doorsteps.' "

Assembly Speaker Karen Bass said the state will face cash-flow problems this summer if the Legislature doesn't act. California Comptroller John Chiang withheld state tax refunds and other state payments for February because of a cash shortage. "We cannot have a long, protracted fight over the budget this year," said Bass, who pledged to deliver a fiscal 2010 budget for a floor vote by July 1.

Assembly Republican Caucus Chair Cameron Smyth said raising taxes is still not a good option. "I have never supported tax increases, and even in the face of these new deficit projections, I remain committed to protecting California taxpayers."