California Democrats agreed to delay raising the minimum wage for about 426,000 health care workers to help balance the state’s budget.
The agreement between Gov. Gavin Newsom and legislative leaders is part of a larger plan to eliminate the estimated $46.8 billion deficit. For the second year in a row, the nation’s most populous state is facing a budget deficit. multi-billion dollar deficit.
Health care workers were scheduled to receive raises on July 1, part of a plan to gradually increase their wages to $25 an hour over the next decade. Now, if approved by the Legislature next week, they could get that increase on Oct. 15 — but only if California’s July-September revenues are at least 3% higher than officials have estimated.
If this does not happen, the increase will begin no later than January 1.
The delay preserves a hard-won victory for one of the state’s largest unions — and one of the Democrats’ biggest campaign donors. Dave Regan, president of the United Healthcare Workers International Union, said workers are disappointed they won’t get a pay raise this summer.
“But we also recognize and appreciate that legislative leaders and the Governor listened to us as we mobilized and spoke out this year, insisting that despite historic budget shortfalls, the patient care and staffing crisis in the field must be addressed. health care in California,” he said in a statement. statement.
The minimum wage for most Californians is $16 an hour, already one of the highest in the country. The minimum wage for most fast food workers in the state is $20 an hour. started in April and had ripple effects across the state.
But increasing wages for medical workers is more difficult due to the impact on the budget. California employs some health care providers and also pays for health care benefits through the state’s Medicaid program.
Newsom’s administration previously said raising the minimum wage would cost the state about $2 billion. But if it were delayed until January, it would cost the general fund about $600 million, a figure that would rise annually to reflect planned increases until it reached $25 an hour for most health care workers.
California’s revenues, although declining for much of the past two years, have rebounded recently.
“We are confident that the initial salary increases for workers who have not yet received them will occur in the fall,” Regan said.
In total, the budget agreement will approve $297.9 billion in spending over the next fiscal year, which begins July 1. Newsom and legislative leaders agreed to cut $16 billion in spending, including $110 million for a program that helps middle-class students pay tuition. college and $1.1 billion for various affordable housing programs.
But Newsom and lawmakers agreed to scrap some previously proposed cuts, including one that would have stopped paying people for caring for some low-income immigrants with disabilities who are on Medicaid.
Lawmakers agreed borrow $400 million to utility Pacific Gas & Electric to help extend the life of the state’s only remaining nuclear power plant – money that some lawmakers opposed because they were concerned it might never be repaid.
And Newsom has agreed to increase the amount the state Medicaid program pays doctors to treat patients, although the amount is much less than he previously agreed to spend. Meanwhile, doctors qualified for the November ballot a measure that would force the state pay them more to treat Medicaid patients..
In addition to cuts of nearly 8% for state agencies, the agreement includes an additional $350 million in cuts to state prisons. It also includes temporary tax increases — starting this year and through 2026 — for businesses with taxable income of more than $1 million.
“This agreement puts the state on a path to long-term fiscal stability—addressing the current deficit and improving fiscal sustainability in the future,” Newsom said.
Lawmakers are likely to vote on the budget next week. Republicans, who do not control enough seats to influence legislation, say they have been left out of the negotiations.
Senate President pro tempore Mike McGuire said it was a “tough budget year” but elected officials were able to “reduce the deficit, protect our progress and maintain responsible reserves.”
Democratic Assembly Speaker Robert Rivas said the Assembly “has made every effort to protect the public services that matter most to Californians.”