Calif. budget proposal requests $6.9 billion in federal funds

State lawmakers said the rest of the governor's plan is an unrealistic way to address the state's $20 billion budget deficit.

By Doug Trapp — Posted Jan. 19, 2010

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California Gov. Arnold Schwarzenegger on Jan. 8 said the federal government should continue paying for a larger share of the state's Medicaid program. He also proposed a series of budget cuts, including cuts to a variety of health programs.

Schwarzenegger's 2010-11 budget proposal calls for $6.9 billion in additional federal support, $8.5 billion in cuts, and $4.5 billion in alternative funding and budget shifts. The proposal would erase a $19.9 billion gap the state is expected to face by July 2011.

About $2.4 billion of the cuts would affect California Dept. of Health and Human Services programs. For example, eligibility for the Children's Health Insurance Program would be reduced from 250% of the federal poverty level to 200%, and enrollees would face additional cost sharing. Also, immigrants would have their Medicaid benefits reduced, among a wide variety of other changes.

Schwarzenegger called for extending the funding provided through December 2010 in the most recent federal economic stimulus package. The stimulus package increased the federal share of Medicaid funding for the 27 months starting in October 2008, among other assistance. Schwarzenegger estimated that extending federal support through July 2011 would give the state an additional $3.9 billion in federal funding.

Schwarzenegger said California had a $6.9 billion budget deficit when he signed the 2009-10 budget last year, but lower revenues and higher program costs increased it. "Tough times still lie ahead," he said. On Jan. 3, he also declared a fiscal emergency and called an immediate special legislative session deal with the fiscal crisis.

State leaders supported Schwarzenegger's effort to seek additional federal funding. But Assembly Speaker Karen Bass criticized his tone and his promises of draconian cuts to safety net programs if his proposal is not adopted.

"Budget threats the governor usually aims at the Legislature should not be turned to the president of the United States," Bass said.

"With regard to the bulk of the budget proposal, I have one reaction: You've got to be kidding," said Senate President Pro Tem Darrell Steinberg. Still, both Bass and Steinberg pledged to work with Schwarzenegger on the budget.

Schwarzenegger's federal requests come after his public statements against the health reform legislation adopted by the House and Senate. He said the bills would unfairly increase state spending on health care. "Health care reform, which started as noble and needed legislation, has become a trough of bribes, deals and loopholes," he said in his State of the State speech on Jan. 6.

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