California Senate Panel Able to Restore Health-Care Spending

A California Senate subcommittee restored hundreds of millions of dollars in health-care spending Thursday as lawmakers quickly capitalized on a federal tax cut bill that promises as much as $2.4 billion to California.

The money represents California’s share of the $20 billion Congress is giving to state and local governments as part of the tax cut package headed for passage in Washington.

Under the bill, states must spend roughly half the money on health care. In California’s case, that amounts to about $1.3 billion. The remainder, about $1.1 billion, is supposed to be spent on an array of state and local programs, ranging from education to law enforcement.

“It is a good start,” said Steve Maviglio, press secretary for Gov. Gray Davis. “We still seek more money for homeland security.”

The Davis administration claims $700 million in costs related to heightened security and has received about $100 million, Maviglio said. California also continues to push for more money to pay for the incarceration of illegal immigrants.

The $2.4 billion doesn’t close the budget gap, estimated at $38 billion. But given that roughly half the money is earmarked for health care, advocates for health-care programs were quick to say that lawmakers should reject about $1 billion in cuts proposed by Davis.

“It is a great day for patients,” said Steven Thompson of the California Medical Assn., which represents physicians. Any attempt to pursue health-care cuts would be “a little mean-spirited,” he added.

Among the cuts that could be averted is a 15% reduction in payments to physicians who care for people whose health care is paid for through the state Medi-Cal program. Dental care for poor people also likely would be restored.

Sen. Dick Ackerman (R-Irvine), the Senate budget committee vice chairman, said the health-care money could help persuade Democrats to vote for the budget, noting that if the money arrives, “we won’t be cutting programs they like.”

“It is wonderful,” said Sen. Gil Cedillo (D-Los Angeles), a member of the budget subcommittee. Added Senate leader John Burton (D-San Francisco): “It helps us narrow the gap dramatically.”

The states’ share of the $20 billion is based on their populations. However, California’s share is expected to fall short of 12%, which is the state’s percentage of the nation’s population, said Tim Ransdell, director of the nonprofit California Institute in Washington, D.C.

That’s because the formula in the federal legislation relies on 2000 census figures, and California’s population has grown significantly since then. Additionally, the bill requires that small states receive minimum amounts of funding.

“It ain’t much, but it is still something,” said Ransdell, whose organization is funded by business, labor, universities and the Public Policy Institute of California.

In Sacramento, lawmakers regularly approve measures to bring state tax law into conformity with federal tax law. This year, Republicans in the Legislature likely will seek to conform with the centerpiece of the federal bill -- the tax cut on dividend income paid by publicly traded corporations to stockholders. Democrats likely will oppose such a move, as they look to raise taxes to help close the budget shortfall.

California Treasurer Phil Angelides, a Democrat who has been among the sharpest critics in Sacramento of the dividend tax cut, urged lawmakers to reject any such change in the state.

“I give the president credit for only one thing: his brazenness in pursuing his wrongheaded idea of moving more of the wealth to the wealthiest among us,” Angelides said, likening the $20-billion state aid package to “giving the starving dogs a rubber bone.”

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Times staff writers Jenifer Warren in Sacramento and Janet Hook in Washington, D.C., contributed to this report.