Dave Cox Senate Report: January 2008

The Senate Health Committee considered Assembly Bill 1X 1 by Speaker Fabian Nunez, the comprehensive health care reform measure introduced in last year's special session on health care. This proposal, passed by the Assembly in December with no time for Assembly members to review the final product, was given a thorough review by the Senate Committee.

No summary would do this 200-page bill justice, but it basically requires all Californians to have health insurance. It requires California employers to provide their employees with insurance or pay a fee to the state of up to 6.5 percent of their total payroll. People who cannot afford to purchase insurance would be provided with a plan by the state with a standard set of benefits for a small monthly premium. Hospitals would have to pay four percent of their net revenues to the state, and the tax on cigarettes would be increased by $1.75 per pack to help pay for the plan.

Needless to say, this is a complicated measure. The Senate Health Committee had an eleven hour hearing on the bill on January 23^rd. At that time, we had the benefit of a fiscal analysis of the bill provided by Legislative Analyst Elizabeth Hill. Generally, Ms. Hill concluded that based on current estimates of health care costs and the premiums paid for individuals covered by the state-provided plan, the program would start running deficits (expenses exceeding revenues) by the fifth year of operations. Her analysis of higher premium levels revealed estimates of deficits starting even sooner. The bottom line of her estimates of costs compared to revenues was that the deficit might be over $1.5 billion annually by the year 2012. Although the Leg Analyst's analysis is excellent as is most of the work of her office, I believe that the assumption that a state-provided plan would only cost $250 per month is much too optimistic. There are other areas of the analysis that I also believe are unreasonable.

I voted against Speaker Nunez's health care reform bill. I have said before that Senate Republicans support a more market-based reform that focuses on improving access to health care rather than providing everyone, including people who are illegal immigrants, with a government-sponsored health care plan. We need to increase flexibility in the type of plans insurers can offer to Californians that more easily fit their individual health needs. Tax credits and increasing the number of health care providers will assist people in getting the type of care they need at a reduced price. None of these concepts were included in AB 1X 1.

California currently spends $36 billion per year on health care for low income Californians. This figure has been increasing annually at a rate above inflation since I have been in the Legislature. There is no reason to believe that a massive expansion of government-provided health care under AB 1X 1 would not continue that trend and possibly bankrupt the state. We need health care reform. But AB 1X 1 is not the right solution.

What can be said about the Governor's proposed state budget for 2008-2009? What has been widely reported is the effort of his administration to impose "across the board" cuts of ten percent to all government agencies. It is clear when you actually look at each department in the budget that this is not necessarily the case. Many agencies are not subjected to the reduction, and the ten percent in many cases is based on their 2007-2008 expected expenditures, which actually result in a net increase in expenditures for the new budget year.

As demonstrated in Chart 1 below, the actual change in General Fund expenditures from Current Year (2007-08) to Budget Year (2008-09) is a reduction of only 2.3 percent and some state agencies actually experienced a net increase. It should also be noted that the 2007-08 proposed expenditures of $103.4 billion are in fact $1.1 billion higher than the $102.3 billion level approved in the 2007-08 Budget Act. So, the Current Year spending "reduction" is actually an increase of $1.1 billion.

Furthermore, (see Chart 2) looking back over the past five years it is clear that even if the Governor's proposed budget-balancing reductions are approved, total state General Fund expenditures will have increased by nearly $25 billion (over 32%). It is difficult to understand how a five-year spending increase of nearly $25 billion has been decried as "draconian" spending cuts. This must be some new kind of "Sacramento math."

Spending Increases by Agency
Current Year vs. Proposed Budget
(Dollars in millions)
			Revised 2007-08 to 2008-09
AGENCY	2007-08	2008-09	Change	% Change
Legislative, Judicial, Executive	$3,914	$3,787	-$127	-3.2%
State and Consumer Services	$597	$608	$11	.8%
Business, Transportation & Housing	$1,526	$1,679	$153	10.0%
Resources	$1,804	$1,657	-$147	-8.1%
Environmental Protection	$91	$86	-$5	-5.5%
Health and Human Services	$29,577	$29,298	-$279	-0.9%
Corrections and Rehabilitation	$10,096	$10,268	$172	.7%
K-12 Education	$42,045	$39,411	-$2,634	-6.3%
Higher Education	$11,803	$11,699	-$104	-0.9%
Labor and Workforce Development	$104	$98	-$6	-5.8%
General Government	$1,816	$2,407	$591	32.5%
TOTALS	$103,373	$100,998	-$2,375	-2.3%

Spending Increases by Agency
Over the Past Five Years

(Dollars in millions)
			2003-04 to 2008-09
AGENCY	2003-04	2008-09	Change	% Change
Legislative, Judicial, Executive	$2,544	$3,787	$1,243	48.9%
State and Consumer Services	$462	$608	$146	31.6%
Business, Transportation & Housing	$499	$1,679	$1,180	236.5%
Resources	$950	$1,657	$707	.4%
Environmental Protection	$81	$86	5	6.2%
Health and Human Services	$22,762	$298	$6,536	28.7%
Corrections and Rehabilitation	$5,389	$10,268	$4,879	90.5%
K-12 Education	$32,457	$39,411	$6,954	21.4%
Higher Education	$8,780	$11,699	$2,919	33.2%
Labor and Workforce Development	$113	$98	-$15	-13.3%
General Government	$2,290	$2,407	$117	5.1%
TOTALS	$76,327	$100,998	$24,671	32.3%

As is the custom, the legislative budget committees will now begin examining the proposed budget for the next fiscal year. We have also been called into a new special session to consider current year reductions. Given a possible deficit of over $14 billion, current year reductions are a necessary element of the solution. I will keep you up to date on developments as they progress this year.

I strongly encourage college graduates to apply for the prestigious Capital Fellowship programs. Applications are now available online at:
www.csus.edu/calst

Public service is a challenging and rewarding experience. The Capital Fellows Programs offer an exciting opportunity for college graduates to gain hands-on experience in the democratic process and to work with the best and brightest leaders in California.

The Capital Fellows Programs provide college graduates an opportunity to work in high levels of government. Qualified fellows are assigned to Senators, Assembly members, judges and senior state officials. These fellowships are jointly operated by each participating branch of government and the Center for California Studies at Sacramento State University.

Fellows are paid a monthly salary of $1,972 plus health, vision, and dental benefits. In addition, each individual earns 12 units of graduate credit from Sacramento State.

Anyone who will be at least 20 years of age and a graduate of a four-year college or university by September 1, 2008 is eligible to apply. There is no preferred major. Individuals with advanced degrees and those in mid-career are also encouraged to apply.

For our fourth year in the Senate, we will have our third Senate Fellow. He is Sam Parsons, a graduate of Sacramento State University who originally comes from Placerville. We are glad to have him in our Capitol Office.

All applications for fellowships must be postmarked by Wednesday, February 27, 2008.

We would like to remind high school students, recent graduates and parents about the 2008 Cal Grant Application Period. The application deadline is Sunday, March 2, 2008. Applications postmarked March 3, 2003, or earlier will be accepted as on time.

We know how hard it is for working families and single parents to send their children to college. Students and parents who wish to apply for a Cal Grant can do so by applying on-line at www.fafsa.ed.gov or by calling (800) 224-7268.