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Governor Calls Special Sessions to Find Funding Solutions for Health and Human Services, Transportation

As part of his budget agreement with lawmakers, Governor Brown convened two special sessions of the Legislature to address funding for certain health and human services programs and the state’s transportation infrastructure. These special sessions – which began on June 19 and are likely to continue through the summer – will focus lawmakers’ attention on efforts to:

  • Create a permanent source of funding to support certain and human services programs. Currently, California uses revenues provided by a tax on certain managed care organizations (MCOs) to draw down additional federal funds for Medi-Cal – the state’s Medicaid program – and offset the state’s General Fund costs for Medi-Cal by roughly $1 billion per year, funds that are used to support other state priorities. However, the current MCO tax does not meet federal guidelines and must be replaced. The Governor had sought to put a revised MCO tax in place as part of the 2015-16 budget package, but an agreement with lawmakers was not reached. In convening this special session, the Governor indicated that a new MCO tax and/or alternative sources of funding are needed to:
    • Maintain the annual $1.1 billion in General Fund offset that the current MCO tax currently provides, which would allow the state to avoid making more than $1 billion in cuts to services in 2016-17 and beyond.
    • Provide ongoing funding to support the cost of rolling back a 7 percent reduction to hours of care in the In-Home Supportive Services Program. (See page 15.)
    • Increase payment rates for Medi-Cal services and for services provided to Californians with developmental disabilities.
  • Create a permanent source of funding to maintain and improve the state’s transportation infrastructure. Current taxes fail to provide sufficient annual support for California’s “vast system” of state highways, local streets and roads, and bridges, according to the Governor. For example, the annual cost of repairing state highways is estimated to be $8 billion, but fuel excise tax revenues provide only $2.3 billion for this purpose. In convening a special session on transportation funding, the Governor indicated that “pay-as-you-go, permanent” revenues are needed to:
    • Maintain and repair the state’s transportation infrastructure.
    • Improve key trade corridors.
    • Complement local efforts to repair and improve local transportation infrastructure.

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