Medi-Cal providers justly get a pay boost (for now), Earned Income Tax Credit expansion hopefully will incentivize work, but taxpayer protections at the Board of Equalization and electoral fairness take a hit under the budget proposal the legislature will vote on today.


Medi-Cal health providers deserved a boost in pay so sending some tobacco tax money to Medi-Cal providers is appropriate. But while underfunded Medi-Cal providers complain they don’t get enough of the tobacco tax money, there is a long-term problem involved with using tobacco tax to boost Medi-Cal. The compromise between the governor, legislators and backers of the initiative will deliver incentives for providers to take on more Medi-Cal patients while tax money will also allow for covering more health care costs that the state is taking over from the federal government. However, as opponents of the tax increase (including me) pointed out during the campaign, programs relying on tobacco tax money will see diminished returns over the years.  

Revenue from the surtax on cigarettes and tobacco products has dropped every year since 1999-2000 according to Board of Equalization data. While tax revenue from the newly imposed tax increase will initially boost revenues, historical data shows the revenue will decline and may not even reach the anticipated take under the new tax when tobacco users feel the burn of the $2.00 per pack (over 200%) tax increase. The real problem with the Medi-Cal system is the enormous number of the state’s population that must rely on Medi-Cal. That can only be fixed with an emphasis on economic growth to raise people’s incomes–but that’s a discussion for another time.


The California Earned Income Tax Credit is designed to help working families get cash or a credit against their taxes as long as they file tax forms. While expanding the tax credit puts another pinch on the budget by including self-employed and raising the income threshold, which will allow more working families to gain the credit, the program is designed to encourage people to work.

The Earned Income Tax Credit idea is not one embraced exclusively by Democrats. As I wrote over a year ago in a column about income inequality, conservative fiscal warrior, the late Republican congressman Jack Kemp, championed the idea of the Earned Income Tax Credit. Kemp thought the EITC was a tool to help lift people out of poverty by linking effort to reward—giving people a chance to develop their talent and potential.


While the Earned Income Tax Credit and Medi-Cal are clearly budget matters, revamping the Board of Equalization and changing 100-year-old recall election rules are not. The majority can thinly dress these issues up in budget clothing but the covering is like those false fronts on the old western movie sets. The reality is easily exposed with cursory examination.

There have been a number of articles on this site over the last three days on the BOE re-do, including one today by Loren Kaye questioning the constitutionality of the move. Taxpayer protection will be undercut if the appeals process moves from elected officials to appointed civil servants. I touched on this concern previously in arguing that a tax oversight board that considers taxpayer appeals should be elected. Elected officers will be more responsive to the people, rather than appointed officers who are loyal to the person who appoints them.

As to the change of rules in a recall election, there is no need to repeat the arguments I laid out a couple of days ago. But, the idea that such a blatant political move be tied to the budget vote is so out of bounds. It maintains the cynicism voters have for elected officials.

Similar actions of legislators’ self-dealing caused voters to change the rules on legislators in the past first by creating an independent redistricting commission (Proposition 11 in 2008) and then passing a law to prevent last minute bill changes in the dark right before a final vote is taken (Proposition 54 in 2016).

The voters are watching these new slights-of-hand maneuvers. Don’t be surprised if they respond with reforms as they have in the past.