More Skirmishes on Prop 30 Extension

Loren Kaye
President of the California Foundation for Commerce and Education

Another piece has been moved on the November ballot chess board.

Last week attorneys for the California Teachers Association and California Hospital Association submitted another version of an extension of the top brackets of California’s personal income tax. These brackets were added, ostensibly on a temporary basis, by Proposition 30 in 2012.

The new proposal maintains the rates at their existing levels, but allocates up to $2 billion a year from the proceeds of the extended taxes to providers of physician, hospital and managed care services for the state’s Medi-Cal population.

The Medi-Cal program is the single largest program in all of state government, when measured by all state and federal spending – even larger than all K-12 spending in the state. Governor Brown successfully expanded the program to a larger population of poor Californians, as permitted by the Affordable Care Act. Some 30 percent of Californians receive their health services through Medi-Cal.

Notwithstanding the enormous amounts spent on this program, reimbursement rates for physicians and hospitals are among the lowest in the nation.

This latest development on the ballot front is a consequence of what was shaping up to be a ballot war between the CTA and the union representing hospital workers. The teachers’ group had sponsored a simple, 12-year extension of Proposition 30 – which coincidentally is just now eligible for signature collection.

But frustrated by the inability to improve reimbursements for health care providers, the United Health Workers division of SEIU, along with the Hospital Association, filed a measure that extended the Proposition 30 income tax rates permanently, and added two more higher brackets, for a top rate of 15.3 percent on the highest earners.

Skirmishes ensued, as did negotiations.

Whether this version truly represents a joint teachers union/health care effort remains to be seen. The health care union has not indicated its position on this approach; indeed, in a bizarre twist, it recently sued the CHA for entering into negotiations with CTA in the first place.

Amid this uncertainty, one fact remains unassailable: the CTA has a measure “on the street” for which they can begin collecting signatures. Everything else for now is speculation.

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