Panel Votes $361 Million for Budget Shortages

A Senate committee approved legislation Tuesday that would provide $361 million to cover state budget shortages, including a $123-million deficit in the Deukmejian Administration’s Medi-Cal program that has halted payments to doctors, hospitals and other providers of medical services to the poor.

Before acting on the Administration-sponsored bill, critics on the Democrat-controlled Senate Budget and Fiscal Review Committee accused Republican Gov. George Deukmejian of running up the biggest budget shortfalls in state history, despite his claims that he has been fiscally prudent.

“During this governor’s Administration, deficiencies at budget year end have grown enormously,” said Sen. Alfred E. Alquist (D-San Jose), committee chairman.

Vasconcellos’ Effort

In all, the bill, carried by Assemblyman John Vasconcellos (D-Santa Clara), would appropriate $361 million to meet shortages in Deukmejian’s budget for the current fiscal year that ends July 1.

The money would be spent to pay bills owed by a large number of state programs, including the Medi-Cal health care plan for the poor.

The state controller’s office on Friday was unable to issue $65.7 million in checks owed to Medi-Cal providers. Another $37 million is due this Friday.

“The Medi-Cal account is exhausted. There is no money to pay the bills,” said Peter Pelkofer, deputy state controller.

Pelkofer said that as soon as the legislation is passed and the money is appropriated, the state can resume paying the overdue Medi-Cal bills.

From Budget Reserve

Money to cover the shortfall will come from the budget reserve, which stood at just over $1 billion at the beginning of the fiscal year but which is projected to drop to about $550 million with passage of the bill.

Other shortages include $25.7 million in the assistance program for the aged, blind and disabled; $76.3 million to provide inmate housing and more guards for the swelling prison population, and $16 million to the Department of Forestry for unexpected firefighting costs.

Bills correcting budget shortfalls are not new to the Deukmejian Administration.

In the past, such bills have been a routine part of budget housekeeping, correcting inaccurate cost estimates on the number of patients treated under state medical programs or the size of student populations in public schools.

The size of the budget shortfalls began to rise under former Gov. Edmund G. Brown Jr., but they have been soaring under Deukmejian, Administration critics say. And, while the Medi-Cal program has experienced year-end shortfalls in the past, officials said the checks have been stopped this year earlier than ever.

A report prepared by acting Legislative Analyst John L. Vickerman, the Legislature’s nonpartisan budget adviser, showed that year-end deficiencies before Deukmejian ranged from $5 million to $100 million. But, the report said, the deficiencies in Deukmejian’s first three budgets have been between $109 million and $417 million.

Vickerman predicted that the governor’s new state budget for fiscal 1986-87 will be short an estimated $560 million when the next fiscal year begins July 1 because of overly conservative spending estimates.

Deukmejian, in running for reelection to his second term this year, nearly always refers in campaign speeches to the $1-billion reserve he builds into the budget each year as a sign of the fiscal good health he has brought to the state. He inherited a $1.5-billion budget deficit from Brown.

But Democrats claim the reserve is more mythical than real because of the annual budget deficiencies.

Alquist opened the hearing by citing the reserve and possible political motivations by the governor. He said:

“A cynic might say that the governor is deliberately underfunding items that end up in deficiency bills . . . in order to maintain the highest possible reserve for economic uncertainties in June at budget time when his sense of ‘fiscal responsibility’ is most visible.”

Alquist said that even in giving the governor the benefit of the doubt, one would have to conclude “that the financial planners for the state of California are not very professional when they miss almost $1 billion in deficiencies over a four-year period.”

Kevin Brett, a spokesman for the governor, insisted that Democrats had a much worse track record for managing fiscal affairs when they were controlling the budget under Brown. “Let’s remember who the critics are. They are the same critics who led the state down the path to the $1.5-billion budget deficit,” he said.

Brett said that last year the state finished the fiscal year with a $1.4-billion surplus, about $400,000 more than what the governor budgeted. He also argued that one explanation of the higher budget deficiencies under Deukmejian was the fact that now all budget shortfall remedies are carried in one bill, whereas under Brown they were put into several bills.