CA to legislature: Hey, we “deeply regret” that $1.9 billion miss on entitlement spending

posted at 7:21 pm on January 19, 2017 by Ed Morrissey

Hey, $1.9 billion here, $1.9 billion there … pretty soon you’re talking about entirely imaginary numbers. That’s the message that Governor Jerry Brown’s administration sent to the California legislature when they admitted that they had miscalculated their expenditures in the state’s Medicaid program, known as Medi-Cal. The admission came during the new round of budget negotiations, even though the mistake had been known for months:

Gov. Jerry Brown’s administration miscalculated costs for the state Medi-Cal program by $1.9 billion last year, an oversight that contributed to Brown’s projection of a deficit in the upcoming budget, officials acknowledged this week.

The administration discovered accounting mistakes last fall, but it did not notify lawmakers until the administration included adjustments to make up for the errors in Brown’s budget proposal last week. The Democratic governor called for more than $3 billion in cuts because of a projected deficit he pegged at $1.6 billion.

“There’s no other way to describe this other than a straight up error in accounting, which we deeply regret,” said H.D. Palmer, a spokesman for the Department of Finance.

So why didn’t the Brown administration notify the legislature immediately? According to the governor’s office, errors traditionally get mitigated in the next budget cycle. Well, okay, but that would apply to errors of a small scale, wouldn’t it? A budget hole this size might prompt the legislature to fix the problems early and limit the damage. Instead, California spent more than it should, and now has to make up the money.

That’s actually not the only problem with the budget, as the Associated Press explains in this report. Not only did California spend more than it projected on Medi-Cal, it also took in quite a bit less than it projected in tax revenues. According to the revenue estimates in Brown’s proposed budget will miss by almost six billion dollars over three budget cycles:

The General Fund revenue forecast has been reduced, reflecting lower growth in wages, proprietorship income, consumption, and investment. As a result, before accounting for transfers such as to the Rainy Day Fund, General Fund revenue is lower than the 2016 Budget Act projections by $5.8 billion from 2015‑16 through 2017‑18.

Figure REV‑01 compares the revenue forecasts, by source, in the 2016 Budget Act and the Governor’s Budget. Revenue, including transfers, is expected to be $119 billion in 2016‑17 and $124 billion in 2017‑18. The projected decrease since the 2016 Budget Act is due to a lower forecast for all three major revenue sources. Over the three fiscal years, personal income tax is down $2.1 billion, sales tax is down $1.9 billion, and corporation tax is down $1.7 billion.

So much for that booming economy that the media insists that Donald Trump will inherit from Barack Obama tomorrow. California’s pursuit of progressive social and economic policies have worked their usual miracle of draining growth from what should be dynamic economic environments.

And if the Golden State status quo wasn’t bad enough, The Hill reports that the dominant Democratic Party is about to take a turn to the extreme:

Supporters of Sen. Bernie Sanders (I-Vt.) turned out en masse at ordinarily sleepy party caucuses earlier this month, electing a slate of delegates who could be poised to take over the largest Democratic Party organization outside of Washington, D.C.

As final vote totals trickled in, Sanders backers claimed to have elected more than 650 delegates out of 1,120 available seats chosen at this month’s caucuses. Those delegates will choose the next state Democratic Party chairman, along with other party officials. …

California’s legislature has been at the vanguard of some of the most liberal policy programs in the nation, on everything from climate change to immigrant rights. Sanders supporters hope to leverage their newfound power to convince Democratic majorities in the state Assembly and state Senate to embrace even more aggressive progressive positions.

“This is to basically force the issues that we vote on onto the legislators for action. So it’s a very serious sea change,” said RoseAnn DeMoro, who heads National Nurses United and the California Nurses Association, groups that backed Sanders during his 2016 presidential primary.

And look how well that’s working out for the state already! Get ready for a lot more unpleasant budget surprises, Californians — and a continuing exodus of capital and talent.


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