Governor Proposes 2010-2011 Budget
Governor Schwarzenegger recently proposed a State budget for 2010-2011 with projected spending at $83 billion and a deficit projected at $19.9 billion over the next 18 months.  Although the deficit is considerably less than California experienced in the 2009-2010 budget, the fiscal situation will force legislators to make some difficult choices in order to balance the State's budget.  The Governor has proposed closing the gap through a combination of spending reductions/cuts ($8.5 billion), fund shifts and alternative revenues ($4.5 billion), and increased federal funds ($6.9 billion). Even though the Governor projects that revenues will increase by only $1.2 billion over the previous year, the Governor flatly rejected any need for tax increases. 

The governor has proposed some spending cuts that will affect physicians.  Of the $8.5 billion in proposed spending reductions, $2.4 billion is in the area of Health & Human Services (an 8% reduction from 2009-10).  This includes a projected $750 million savings from Medi-Cal cost containment strategies such as limits on services, utilization controls, and increased cost-sharing through co-payment requirements, premiums, or both.  This also includes a proposed reduction of $77.9 million in 2009-10 and $872.6 million in 2010-11 by limiting the provision of services to consumers with the highest level of need and reducing state participation in In-home Support Services (IHSS) workers' wages. 

In the event that the State does not receive the full $6.9 billion in projected additional contributions from the Federal Government, the Governor has proposed a series of additional spending cuts and revenue enhancements to be implemented in order to recover up to $4.6 billion, including: funding existing mental health services with Proposition 63 funds ($847 million); reducing Medi-Cal eligibility to the minimum allowed under current federal law and eliminating most remaining optional benefits ($532 million); eliminating the Healthy Families Program ($126 million); and, eliminating various health services programs funded by Proposition 99 ($115 million). Additional revenues of up to $2.4 billion would be received through suspending a business's ability to reduce taxable income by applying net operating losses (NOL) from prior years to reduce current income ($1.2 billion) and reducing the credit for each dependent on the personal income tax from $319 to $102 ($504 million), among others.