California Gov. Gavin Newsom proposed 2024-25 budget revisions last month. While the budget’s focus was a balanced approach to turn a cumulative two-year budget deficit into operating revenue surplus, steep cuts to healthcare programs have advocates worried about the future of healthcare in the state.
The legislature passed an early action budget package in April, which reduced the budget shortfall by about $17.3 billion, with the previous projected shortfall being $37.9 billion. Some government operations and programs received cuts, and new investments were paused.
“While the governor’s proposal protects many vital programs and services, it also includes cuts to programs and services that affect the day-to-day lives of Californians with low-incomes and Californians of color. The proposed cuts and delays are a result of policy choices and can be avoided through a series of different policy solutions to balance the budget,” Chris Hoene, executive director of the California Budget & Policy Center, said in a statement.
Hoene said the May budget revision is an example of challenging choices that could result in harm caused by Newsom’s refusal to close corporate tax loopholes to raise revenues, and create a more fair and equitable state tax system.
“Worrisome delays include a two-year delay of the California Food Assistance Program Expansion and an indefinite pause of child care slot expansion,” Hoene said. “The administration’s proposed cuts and other delays would reverse a decade of progress and exacerbate racial and gender inequities.”
The California Food Assistance Program Expansion will kick back up in 2026-27, with benefits beginning in 2027-28. Assembly Bill 135, passed in 2021, allowed for the expansion of the California Food Assistance Program by allocating funds for non-citizens who were left out of the CalFresh program based solely on their immigration status.
The Western Center on Law and Poverty issued a statement, with 133 organizations representing aging and disability stakeholders signing on. It included the city of Oakland, Disability Rights California, Immigrant Defense Advocates, and Latino Coalition for a Healthy California.
“We are disappointed in the two-year delay in implementing the expansion of the California Food Assistance Program for undocumented older adults. Food insecurity is a fundamental element of the social determinants of health. All Californians deserve access to food, and low-income undocumented Californians have been unjustly excluded for too long. Further delaying the expansion only exacerbates these harms,” according to the statement.
The Managed Care Organization (MCO) Tax will be reduced by $6.7 billion over several years from the Medi-Cal provider rate increases that were planned for Jan. 1, 2025, and from the Graduate Medical Education and Medi-Cal labor workforce.
“The May revision proposes an amendment to the MCO Tax to include health plan Medicare revenue in the total revenue limit calculation, which increases the allowable size of the tax resulting in an additional net state benefit of $689.9 million in 2024-25, $950 million in 2025-26, and $1.3 billion in 2026-27,” according to the revision.
Public health will lose $52.5 million in funding in 2023-24, and $300 million ongoing for state and local public health funding.
The healthcare workforce will also experience a reduction of $300.9 million in 2023-24; $302.7 million in 2024-25; $216 million in 2025-26; $19 million in 2026-27; and $16 million in 2027-28. Impacted healthcare workforce initiatives include community health workers, nursing, social work, Song-Brown residencies, Health Professions Career Opportunity Program, and the California Medicine Scholars Program.
“The May revision also eliminates $189.4 million (from the) Mental Health Services Fund for programs proposed to be delayed to 2025-26,” the revision states.
The Children and Youth Behavioral Health Initiative, which focuses on improving well-being and the prevention of behavioral health challenges in youth, will have a one-time reduction of $72.3 million for 2023-24; $348.6 million in 2024-25; and $5 million in 2025-26. Impacted services include school-linked health partnerships, behavioral health services and supports platforms, evidence-based grants, public education, and youth suicide reporting and crisis pilot response.
“The governor is making a choice to cut the very programs families depend on to raise healthy, thriving children. Instead, California will spend billions of dollars on tax breaks for high-profit companies.”
— Mayra E. Alvarez, president of The Children’s Partnership (TCP)
Alvarez said in a statement that she understands Newsom is in a difficult position given the budget deficit, but the organization is highly disappointed that he excluded funding to safeguard healthcare coverage for young children, a thriving wage for community health workers, or reliable internet access for all families, which would close the health equity gap in marginalized communities. Alvarez believes the state has the resources to create health equity for children and families, and she said it’s time to consider new and progressive revenues rather than weakening vital services that are lifelines to families.
“In particular, TCP is disheartened to learn that, for a third year in a row, funding for multi-year continuous Medi-Cal coverage for children ages 0-5 was not included in this budget revision,” Alvarez said. “Despite policymakers having taken steps to implement this policy enacted two years ago, funding is required to preserve young children’s continuous Medi-Cal coverage. Medi-Cal coverage guarantees access to crucial preventative care during the most critical formative years for our youngest Californians.”