California Health Care Workers To Get Bonuses Of Up To $1,500 Through Newsom’s Budget Deal

CA legislature OK's Newsom bonuses for health care workers | The Sacramento  Bee

Source: The Sacramento Bee, by Cathie Anderson

Taxypayer-funded retention bonuses are indeed coming to California’s frontline health care workers after Gov. Gavin Newsom and legislative leaders reached a budget deal Monday setting aside money to thank medical professionals who have worked through the COVID-19 pandemic.

Full-time workers stand to get the biggest potential payments, up to $1,500: up to $1,000 from the state of California and up to $500 in a match from their employers, according to the text of Assembly Bill 184.

Part-time workers will get as much as $1,250, a maximum of $750 of which comes from the state and $500 from their employers.

Physicians will receive up to $1,000 from the state. Managers and supervisors are ineligible for the payouts.

The bonuses will go not only to workers at general acute-care hospitals, government-operated hospitals, skilled nursing facilities and physician practice groups but also to employees at acute psychiatric hospitals, many nonprofit clinics, hospital outpatient clinics, and at any heath facility owned or operated by the state of California or any state department.

“The Legislature finds and declares that stability in the California health care workforce will further its efforts to manage the COVID-19 pandemic and address other public health issues that face Californians,” legislators wrote in laying out their rationale for the bonuses. “Providing California health care workers in 24-hour-care facilities with retention payments … will advance California’s effort to promote stability and retention in California’s health care workforce.”

Legislators noted that the size of the individual payments could drop, depending on how many people take part in the bonus program. They have set aside $1.3 billion for the purpose, and they also provided instructions for a dispute process if physicians or workers feel they have been shortchanged, first requiring them to appeal to their employers before seeking assistance from state agencies or the courts.

Any employer that willfully withholds bonuses is liable to the employees for the unpaid amount and interest, and they may have to pay the employees’ legal fees.

Anthony Cava, a spokesperson for the Department of Health Care Services, said the agency is still working out the operation details of this effort. He could not answer questions about when the money would be distributed.

Full-time employees must have worked at least 400 hours in person and part-time workers at least 100 hours at a facility over a 91-day period in 2022. The state department will determine that employment window after the legislation is enacted.

Employers must pay out funds within 60 days of receiving them and cannot use the funds to cover or replace other payments owed to employees or physicians.

Employers and physician organizations have to report names, addresses and other information for those receiving the payments. The measures are intended to ensure that neither employees nor doctors receive more than one retention bonus, even though they may work at more than one eligible facility.

California Lawmakers Met Their Budget Deadline. Here’s What’s Left To Negotiate In The $300 Billion Spending Plan.

California budget: Big surplus, big differences - CalMatters

Source: Cap Radio, by Nicole Nixon

California state lawmakers approved a $300 billion budget this week, but several key sticking points remain between Governor Gavin Newsom and lawmakers, which could drag out negotiations on a final spending plan.

Under California law, the Legislature must approve a budget by June 15 or forfeit their pay and per diem until they do. The governor must sign the spending plan by June 30, in time for the state’s new fiscal year to begin on July 1.

Often, many budget details are worked out and approved in the weeks following those constitutional deadlines, which are referred to as “budget trailer bills.”

That appears to be the case once again this year, as top lawmakers and Newsom continue to negotiate over exactly how to spend a historic $98 billion surplus.

The budget approved by the Legislature Monday includes a record amount of money for public schools and higher education, as well as a total of $37.8 billion for budgetary reserves — nearly double the amount in savings before the pandemic in 2019.

It also includes $40 billion for infrastructure projects and funding to make Medi-Cal available for every low-income undocumented resident.

Despite the budget’s monstrous size, there are still many details for lawmakers and the governor to work out.

Republican Assembly member Vince Fong (R—Bakersfield) said the approved budget “fails to adequately address critical and core crises facing our state from the devastating drought to catastrophic wildfires, to a potentially crippling power shortage.”

Fong, who is the top Republican on the Assembly Budget Committee, criticized Democrats for passing an incomplete spending plan to meet their deadline and planning to fill in the gaps later. The practice has become the norm in state budget-making over the past decade, though Republicans say it lacks transparency.

Other unresolved issues include rebates to address skyrocketing gas prices and inflation, as well as reimbursement rate increases for state-sponsored child care providers and disability insurance, which received a temporary boost during the pandemic. Lawmakers want to increase those rates, but the Newsom administration is reportedly hesitant.

“It’s not a big surprise that when there’s a lot of money on the table, there might be more points of contention,” said Chris Hoene, executive director of the California Budget and Policy Center. “There’s often more contention about how to spend money during the good times because you’re expanding programs or you’re creating new programs or you’re doing one-time things.”

Another sticking point between top lawmakers and Newsom is the size and eligibility for a tax relief package aimed at helping Californians cope with inflation and record-high gas prices.

In March, Newsom proposed sending $400 per vehicle — up to $800 — to car owners to offset the rising cost of fuel. Leaders in the Assembly and state Senate have insisted on targeting tax relief to lower-income residents, who spend a higher percentage of their income on necessities like housing and transportation and are hit harder by inflation. Senate pro Tem Toni Atkins (D-San Diego) and Speaker Anthony Rendon (D-Lakewood) unveiled their own plan to send $200 per person, with an additional $200 per dependent, for individuals earning up to $125,000 or families with incomes up to $250,000.

But three months later, neither side appears to have budged. In a statement after the Legislature’s budget was passed, Newsom’s office said the governor “would like to see more immediate, direct relief to help millions more families with rising gas, groceries and rent prices” and noting Newsom’s plan would spend $3.5 billion more on tax relief.

Meanwhile, Republicans continue to call on Newsom and Democrats who control the legislature to suspend the state’s gas tax, which is set to increase from 51 cents per gallon to 54 on July 1.

“At a time when we have the highest gas prices not only in the nation, but in U.S. history, we need real solutions that will ease the burden on families, not increase the load,” Assembly member Suzette Valladares (R-Santa Clarita) said at a press conference Wednesday. “My colleagues and I are here … to remind Governor Newsom that it has been nearly 100 days since he promised he would bring Californians relief from the highest gas prices in the nation.”

Valladares told stories of constituents who had to sleep in their cars or skip university classes because they couldn’t afford fuel.

Republican state lawmakers argue suspending the gas tax would provide near-immediate relief to those most impacted by high gas prices.

Democrats have refused to cut the gas tax, citing the funding it provides for infrastructure projects. They also say there’s no way to guarantee oil companies and gas stations would not keep prices high and pocket the difference. A bipartisan bill attempts to address that issue by requiring fuel stations to pass on their savings and by backfilling lost revenue from the state’s burgeoning general fund.

Hoene said as an organization focused on improving life for the state’s lower- and middle-class residents, the California Budget Center prefers the Legislature’s approach of targeting relief based on income. He also thinks the state should deliver the fund through the Franchise Tax Board, which doled out millions of Golden State Stimulus checks last year.

“The best way to get aid into the hands of people who need it most is to base it on their income level,” Hoene said, “and deliver them a check — electronically or in other forms — which is exactly what we did two times over the past year, very successfully in the state.”

Record Budget Surplus Calls for Tripling Down on UI Fund Offset

Source: CalChamber, by Guest Author

Californians have traveled a bumpy road to post-pandemic recovery, with healthy employment and wage growth on the one hand, but soaring inflation and cost-of-living increases on the other.

Governor Gavin Newsom recognizes the squeeze of inflation that has been placed on Californians. To address this, he is proposing $18 billion in tax relief and subsidies to offset some of that pain on the working class. The Governor and the Legislature should also extend relief to employers by paying down the state’s unemployment insurance debt, which will mitigate future tax increases.

California’s unemployment insurance (UI) program is funded exclusively by employers via state and federal payroll taxes on wages. Workers pay no UI payroll taxes. The system is designed to replenish the UI fund during times of economic growth in preparation for high unemployment during recessions. Payroll taxes rise and fall, depending on the condition of the UI safety net.

Unless the Governor and the Legislature act this year, employers will suffer from unemployment insurance payroll taxes. These taxes will increase each year for up to 20 years, more than doubling by 2035. The reason? The massive unemployment shock suffered in 2020 led to economic shutdowns in the wake of the pandemic. Record unemployment rates drained the fund in place to pay for compensation. This meant the state needed to eventually borrow $20 billion from the U.S. Treasury to ensure a safety net for unemployed Californians.

But not even federal money is free. That $20 billion debt must be repaid by employers through a $21 per worker tax increase each year, up to a maximum of $420 per employee each year. For a small business with 25 employees, that would ultimately amount to a $10,000 annual tax increase!

But wait, there’s more. Since this is a loan from the federal treasury, the state General Fund must pay the interest, which is estimated at more than $500 million next year. As long as any debt is outstanding, there will be a continuing state taxpayer expense.

Governor Newsom recognized this risk to employers and taxpayers when he introduced his budget in January. When the budget surplus was projected to be $20 billion, he proposed the state transfer $3 billion to the UI Fund to partially offset the deficit. This represented a great first step—but would have rolled back only a single year of the estimated 20 years of tax increases.

Today—four months later—the facts on the ground have changed. Inflation is taking a bite out of everyone’s pocketbook. For businesses, inflation affects the bottom line—increasing every operating expense. Conversely, the projected state budget surplus has more than doubled since January, marking the third straight year the state has enjoyed record revenue.

Given the economic threats to small businesses, and more than ample state revenues, we suggest the Governor and Legislature triple-down on the original budget proposal with a billion-dollar payroll tax credit to offset the first two years of the UI tax increase, and a $9 billion transfer to the UI fund to cushion the blow of future tax increases and reduce part of the state’s interest payment obligation. An added benefit: according to the nonpartisan Legislative Analyst, this transfer to the UI Fund will not count against the state’s spending limit since it can qualify as emergency spending in response to the pandemic.

Under this proposal, employers will still be liable for more than half of the deficit—which was not caused by a business cycle, but by a pandemic-caused economic shutdown. Employers would be left to pay off a debt comparable to the aftermath of the Great Recession.

Speaking of recessions, the risk of an economic downturn grows as the Federal Reserve fights inflation. It is vital that the UI fund reaches solvency before the next recession and the inevitable higher unemployment.

California is enjoying an unprecedented and unexpected streak of budget surpluses—created in large part from the strong economic performance by key California economic sectors and entrepreneurs. The Governor and Legislature should jump at this fiscally responsible use of one-time funds to mitigate a reasonable share of the UI tax increase—especially in the face of high inflation and lingering effects from the pandemic shutdown.

Unprecedented Budget Surplus Is Focus of May Revision

Despite surplus, analyst warns of California 'fiscal cliff'

Source: CalChamber, by Loren Kaye

To nobody’s surprise, Governor Gavin Newsom on Friday announced another upward revision in the state’s general revenues—a $55 billion bump since January. To the surprise of many, this means that discretionary surpluses for three consecutive fiscal years will top $100 billion. Nobody had this number on their bingo card as the state tumbled into the pandemic recession just two years ago.

This unprecedented and unexpected streak of budget surpluses has been amassed in large part from the strong economic performance by key California economic sectors and entrepreneurs. This creativity and adaptability by employers, along with the commitment of millions of California workers, has seen the state through the tragedy of COVID-19, with extra revenues to bolster the social safety net.

Experience with the California budget teaches that what goes up must come back down, so the Governor prudently sets aside $37 billion into various reserve funds, and calculates that 94% of all spending from surplus funds is dedicated to one-time purposes.

Since the state budget is pushing against the so-called Gann Limit, which caps annual expenditures from the state budget, the Governor targeted several of his initiatives toward spending exempt from the limit, in particular, infrastructure and tax relief.

Noting the toll that inflation has recently taken on individual family budgets (not to mention the already high cost of living endemic to California), the May Revision calls for more than $18 billion in various tax relief or rebate programs, including:

  • * A $400 rebate to households based on registered motor vehicles.
  • * A temporary reduction to the diesel sales tax.
  • * Funding for rental assistance and payments for outstanding utility arrearages built up during the pandemic.
  • * Covering all family fees for subsidized child care programs as well as continued health care subsidies for the middle class if federal subsidies expire.
  • * Retention bonus payments to approximately 600,000 workers in hospitals and nursing homes.

The Governor is also proposing some targeted tax benefits for businesses, including:

  • * Extending the CalCompetes tax credit program for five years at $180 million per year, and extending the CalCompetes grant program for another year at $120 million.
  • * Fully conforming California law to the extended federal Paycheck Protection Program (PPP), which prevents these federal grants from being subject to state taxation.
  • * Another $500 million for a grant program administered by the Small Business Advocate to provide additional relief to small businesses most affected by the pandemic, focusing on the top ten industries hardest hit by the pandemic.

California will receive $13.9 billion in new federal funds from the Infrastructure Investment and Jobs Act that will support transportation, broadband and other projects over the next five years. On top of that, the May Revision will target another $17 billion (on top of $20 billion from the January budget proposal) for electric vehicle infrastructure and clean energy innovation, transportation projects, broadband build-out, and reducing wildfire risk and supporting drought resiliency.

Schools automatically receive a portion of every new general tax dollar, courtesy of a 1988 ballot measure, Proposition 98. The May Revision includes total funding of $128.3 billion for all K-12 education programs—more than $20,000 per student. This is $20 billion more than the Governor proposed in January, and a stunning $35 billion higher than the current year budget. Some $8 billion of this amount is a one-time allocation that schools can use to address the continuing effects of the pandemic by supporting students’ mental health and learning challenges and to take actions to preserve staffing levels.

The Governor made good on his pledge to give annual budget increases of 5% to the University of California and California State University systems over the next five years. In exchange, the systems will be expected to make progress and report annually on goals including improved graduation rates, growing enrollment, making college more affordable and preparing more students for high-demand careers.

Governor Newsom increased his spending commitment for programs related to climate change and drought mitigation, adding $9.5 billion to a $23.5 billion multi-year commitment made in January. The spending will cover drought relief and water projects, investments in clean energy, and subsidies for electric vehicle purchases and charging infrastructure.

The Governor made no changes to his January proposal to transfer $3 billion to the Unemployment Insurance Fund to offset future employer tax liabilities.

FY 2016 Budget to Extend Medicare Mental Health Benefits

The fiscal year 2016 budget, released by President Barack Obama calls for elimination of a provision that limits Medicare beneficiaries to just 190 days of inpatient psychiatric hospital care during their lifetime. Mark Covall, National Association of Psychiatric Health Systems (NAPHS) president and CEO said, “Mental illnesses are the leading cause of disability and contribute to premature death. When people experiencing a mental health or addiction crisis cannot access needed treatment, families and communities are at risk. The President’s budget takes an important step forward to address arbitrary limits that prevent people from accessing the right treatment at the right time. There is no such lifetime limit for any other Medicare specialty inpatient hospital service.”

NAPHS also called on the Administration and Congress to address another discriminatory barrier in the Medicaid program. Adults (ages 21 to 64) with Medicaid don’t have coverage for short-term, acute care in psychiatric hospitals because of the “Institutions for Mental Disease (IMD)” exclusion. “The IMD exclusion is penalizing the disabled and poor. This policy adds to system inefficiencies and adds to the cost of care,” Covall said. Congress has taken bipartisan action to address this issue. Rep. Tim Murphy (R-physician assistant) has developed an NAPHS-backed comprehensive mental health reform plan, the Helping Families in Mental Health Crisis Act. It would create a pathway under Medicaid for people to get access to short-term acute psychiatric care. The measure, which has had bipartisan support, is slated to be reintroduced in the 114th Congress.

The Medicaid Emergency Psychiatric Care Demonstration is also underway in 11 states and the District of Columbia to show the value of giving adult Medicaid beneficiaries this type of access. Preliminary demonstration statistics show that the length of stay in psychiatric hospitals is very short (about eight days). Readmission rates are low (with 84% not returning to the hospital). People are able to go home or to self-care with hospitals’ community partners.

Healthcare To Take a larger Share of California’s Budget

On January 10, 2013, Governor Brown presented a balanced budget for the coming fiscal year, which will begin on July 1. No proposed budget had purported to be balanced since Governor Schwarzenegger’s 2007 to 2008 budget, which he presented in January 2007.

According to an analysis by California Common Sense, while some departments have seen their budgets shrink, the Department of Health Care Services (DHCS) costs have risen dramatically. As one of the largest departments in the state,  spending on DHCS increased 62.2% between 2007 to 2008 and 2013 to 2014, rising from $17 billion to $27.6 billion.

Driving up the departments costs are nationally rising health care costs and increasing enrollment in Medi-CAL, which accounts for most of the departments budget.

The 2007 to 2008 proposed budget estimated a MediCAL caseload of 6.7 million enrollees while the proposed budget for 2013 to 2014 estimates 8.7 million enrollees, a 30% increase. That growth does not include an additional growth in enrollees that’s expected as a result of the enactment of the Affordable Care Act (ACA).

Combined with rising health care costs, increased Medi-Cal enrollment accounts for most of the programs additional costs to the state. The federal government matches DMHC’s funding for enrollees. For a temporary period, the federal government will fund a larger portion of costs arising from new enrollment under ACA.

The department’s $10.6 billion in additional state funding exceeds the state’s net spending increase by $2.8 billion, requiring other service areas to take cuts in order to maintain a balanced state budget.

Employee compensation and retirement benefit costs will also consume a much larger share of state spending in 2013 to 2014 compared to 2007 to 2008. Proposed annual salary spending has increased 15.5% among the executive, judicial, and legislative branches, though spending on legislative salaries has declined slightly.

Annual state contributions to retirement benefits – pensions and retiree health care – have increased $1.5 billion, or 24.8%. In particular, annual retiree health care payments have increased $682 billion and thus account for nearly half of the retirement cost growth. Furthermore, among annual retirement costs to the state, health care for retired employees and their beneficiaries grew the most at 61.2%. In comparison, annual pension contributions increased $790 million, or 16.4%.

Taken together, proposed annual spending on salary and retirement benefit costs increased $3.6 billion, an 18.4% increase since 2007 to 2008. That increase amounts to nearly half of the states $7.8 billion annual increase in spending across the budget. For more information, visit

Last Updated 06/29/2022

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