Why Newsom’s allies in health care are slamming his budget

Presented by California Resources Corporation: Your afternoon must-read briefing on politics and government in the Golden State

May 13, 2024 View in browser   By Rachel Bluth and Sarah Grace Taylor Presented by California Resources Corporation Gov. Gavin Newsom | Getty Images PLAY OUR GAME, WIN PRIZES — Hundreds of bills are headed to the Appropriations committees on Thursday. Use your insider knowledge to guess which bills will be blocked and won't advance past the hearings. Make your prediction by Wednesday for a chance to win a shout-out in California Playbook, some extra special swag and maybe even an invite to a POLITICO coffee date. Happy guessing! THE BUDGET BACKLASH BEGINS: It’s hard having friends in a deficit year, and Gov. Gavin Newsom is upsetting some of his most reliable allies as he tries to close the state’s budget gap. One of Newsom’s proposals is to sweep up an extra $7 billion from the state’s renewed tax on some health plans, called managed care organizations. These funds were initially promised to go toward pay raises for some health care workers and other health care investments. Newsom’s move to walk back that pledge is not only ticking off his traditional supporters in the health sector, but also feeding appetite for a proposed new ballot measure to block governors from making similar maneuvers in the future. “I was shocked by the governor’s new proposal on the MCO tax,” Akilah Weber, who chairs the Assembly’s health budget subcommittee, told Playbook. “It’s like all the discussions we’ve had about it for the last two years have been put on the shelf.” As a quick refresher, some of the state’s biggest health industry players hammered out the MCO tax deal last year, landing on a more than $19 billion package to improve Medi-Cal amid budget negotiations at the time. Hospitals, doctors, health plans, organized labor and a number of other influential constituencies agreed that proceeds from the tax should be used to raise rates for some medical providers, fund public hospitals and community clinics, and create more graduate education slots for new doctors, plus a host of other investments in the state’s safety net. Groups that usually fought each other tooth and nail on health care issues all agreed on a major guiding principle: the money had to be used for Medi-Cal, not the general fund. But the money set aside for those investments is looking pretty attractive with a roughly $28 billion budget hole to fill. And going back on a deal that took the better part of a year to negotiate has prompted disavowals from groups like Planned Parenthood and the California Medical Association, two steadfastly pro-Newsom groups. Planned Parenthood Affiliates of California President Jodi Hicks tweeted that she was “deeply disappointed” in the proposal and CMA’s official statement echoed that language, saying: “Difficult budget decisions are ahead, but we cannot afford to miss the generational opportunity before us to establish an equitable health care system and finally attain true access to care for Californians.” The move also has revived interest in a proposed ballot initiative supported by the same big-money health care interests that negotiated the MCO deal. If passed, the measure would require future proceeds from the tax to always be used for Medi-Cal, so legislators can’t use the funds in future bad budget years — essentially blocking the same kind of move Newsom is making now. It’s not only endorsed by health care interests and organized labor, but by legislative leadership like Senate Pro Tem Mike McGuire and Assembly Speaker Robert Rivas. Weber said she hasn’t been approached about endorsing the measure, but that organizers have even more reason to push for it. “They have a responsibility, to the people in the communities they serve, to keep their doors open.” IT’S MONDAY AFTERNOON. This is California Playbook PM, a POLITICO newsletter that serves as an afternoon temperature check on California politics and a look at what our policy reporters are watching. Got tips or suggestions? Shoot an email to rbluth@politico.com.   A message from California Resources Corporation: California Resources Corporation (CRC) is a different kind of energy company, committed to our net zero future and advancing the energy transition. CRC’s carbon management business, Carbon TerraVault, will offer solutions to help reduce emissions while our workforce provides low-carbon energy needed to power our lives. Carbon TerraVault will enable the capture and permanent storage of carbon dioxide deep underground, helping decarbonize our local economies and empowering California to achieve carbon neutrality. CRC's Carbon TerraVault   WHAT YOU NEED TO KNOW TODAY People protest Arizona's new/old abortion ban. | Rebecca Noble/Getty Images ARIZONA BILL ADVANCES: Newsom’s proposal to allow Arizona abortion doctors to see their patients in California passed the Assembly 55 to 13 today, less than three weeks after he first announced the idea. It now heads back to the Senate for a final vote before landing on Newsom's desk. Senate bill 233 is an attempt to get ahead of Arizona’s civil-war era abortion ban that was upheld by that state’s highest court. Though Arizona’s legislature subsequently repealed the ban, the restrictions could still be in effect for several weeks, if not months due to legislative procedures. California can’t absorb all of the patients that may come over the border for care, Newsom has said, so he sees SB 233 as a way for abortion-seekers to be seen by their own doctors here.   NEW! AN EXCLUSIVE CALIFORNIA BALLOT-MEASURES COVERAGE TEAM: The impact that ballot measures have on California residents, industries, and Legislature is enormous. From settling broad cultural questions to changing obscure governance rules, ballot measures in essence, have become the fourth branch of government in the most influential state capital in the U.S. As your go-to source for reporting on Golden State politics, policy, power, POLITICO has formed a new ballot measure team in California that will deliver in-depth insights into the strategies, policy ideas, personalities, money and influence driving ballot measures. LEARN MORE.     Number of the day $60 million The amount UCLA could have to pay UC Berkeley after leaving its rival campus behind in the Pac-12 athletic conference. UCLA fled for the Big Ten in 2022 in search of more lucrative media deals, leaving Cal behind in a collapsing conference and irking Gov. Newsom. The UC Regents — who govern the 10-campus system — plan to vote Tuesday on UC President Michael V. Drake’s recommendation that Berkeley pay UCLA $10 million a year through 2030 to make up for the revenue losses Cal will suffer as it heads for the ACC. Some are calling it “Calimony.” — Blake Jones ON THE BEATS FOR THE BIRDS: California’s county public health officials are warning that their ability to combat avian flu — and any other communicable diseases that might pop up — will be severely hampered if Newsom’s budget plan passes as is. “If local public health doesn’t have the funding that we need to support testing and disease investigators, we potentially end up in a situation that’s very much like the early days of Covid-19,” said Aimee Sisson, the secretary of the Health Officers Association of California and public health officer from Yolo County, during a press conference today with other public health officials. The governor’s revised budget ends the $300 million annual allotment to public health departments that was established during the pandemic. Already, that money has been used to hire 900 county public health workers around the state, out of a planned 1,200. Most of the money that flows to county public health departments from the state and federal government is earmarked for specific diseases, meaning that the annual $300 million investment has been crucial for dealing with surging diseases as they pop up, like tuberculosis, measles and and sexually transmitted infections, according to Sisson. She’s especially worried about avian influenza, she said, because it is spreading in other states and is likely to come to California.   A message from California Resources Corporation:   DEBATE UPDATE: California’s U.S. Senate candidates have now both quietly said they’ll debate each other — the question is if they’ll find common ground on the hosts and format. First, Democratic Rep. Adam Schiff slipped into an interview after the primary in March that he was committed to debating Garvey. Then, while commenting on very tentative plans for a debate at a UC Berkeley institute that were nixed, a spokesperson for Schiff’s GOP rival Steve Garvey told POLITICO late last week that he would “definitely” participate in a debate. Both candidates are vying for the Senate seat formerly held by the late Sen. Dianne Feinstein, but the race isn’t expected to be competitive with Schiff the clear frontrunner. Schiff and Garvey joined their primary opponents in a trio of debates earlier this year, including the first televised clash sponsored by POLITICO, FOX 11 Los Angeles and the University of Southern California. Representatives for Schiff and Garvey said they’ve received several requests for a general election showdown and are sorting through them to determine what, if any, dates and formats fit their liking.   THE GOLD STANDARD OF DEFENSE POLICY REPORTING & INTELLIGENCE: POLITICO has more than 500 journalists delivering unrivaled reporting and illuminating the policy and regulatory landscape for those who need to know what’s next. Throughout the election and the legislative and regulatory pushes that will follow, POLITICO Pro is indispensable to those who need to make informed decisions fast. The Pro platform dives deeper into critical and quickly evolving sectors and industries, like defense, equipping policymakers and those who shape legislation and regulation with essential news and intelligence from the world’s best politics and policy journalists. Our newsroom is deeper, more experienced, and better sourced than any other. Our defense reporting team—including Lara Seligman, Joe Gould, Paul McCleary, Connor O’Brien and Lee Hudson—is embedded with the market-moving legislative committees and agencies in Washington and across states, delivering unparalleled coverage of defense policy and the defense industry. We bring subscribers inside the conversations that determine policy outcomes and the future of industries, providing insight that cannot be found anywhere else. Get the premier news and policy intelligence service, SUBSCRIBE TO POLITICO PRO TODAY.     WHAT WE'RE READING TODAY — Californians have lost more jobs than residents of any other state so far this year, new federal data show. (FOX) — The average teacher salary in California grew to more than $95,000 last academic year, edging out New York and Massachusetts to become the highest in the country. But many still struggle financially. (Axios) — The California Latino Legislative Caucus turned its priority legislation into laws 54 percent of the time over the past 10 years — far outpacing the legislature’s typical 35-40 percent success rate. (The Sacramento Bee)   A message from California Resources Corporation: Californians need reliable energy to power our busy lives. California Resources Corporation (CRC) is committed to providing innovative carbon management solutions while powering our local communities with the low-carbon energy they need. CRC’s carbon management business, Carbon TerraVault, is developing pathways to help deliver the deep emissions reductions needed for our net zero future. CRC provides real solutions to advance the energy transition and empower California to achieve carbon neutrality by 2045. CRC’s 2045 Full-Scope Net Zero Goal for Scope 1, 2 and 3 emissions places the company among a select few industry peers to include scope 3 emissions in their net zero goal. CRC’s Carbon TerraVault enables the capture and permanent storage of carbon dioxide deep underground - helping decarbonize our local economies and mitigate climate change in California and beyond. Get The Facts on CRC's Carbon TerraVault   AROUND THE STATE — One year after the Writers Guild of America strike hit Hollywood, screenwriters say they are struggling to find work amid a contraction that has led to unstable production and employment levels across the entertainment industry. (Los Angeles Times) — A Compton man who led a Southern California-based narcotics trafficking operation using commercial flights and the Postal Service pleaded guilty to federal narcotics charges. (KTLA) — A first-in-the-nation experiment attempting to slow global warming by brightening clouds came to a halt in Alameda County after officials cited health and environmental safety concerns. (The San Francisco Chronicle)   Follow us on Twitter Sarah Grace Taylor @_SarahGTaylor   Subscribe to the POLITICO Playbook family Playbook  |  Playbook PM  |  California Playbook  |  Florida Playbook  |  Illinois Playbook  |  Massachusetts Playbook  |  New Jersey Playbook  |  New York Playbook  |  Ottawa Playbook  |  Brussels Playbook  |  London Playbook View all our political and policy newsletters Follow us

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