SACRAMENTO, Calif. (AP) — Democrats in California have agreed to delay a minimum wage increase for about 426,000 health care workers to assist cover the state budget.
The agreement between Governor Gavin Newsom and state leaders is part of a broader plan to close an estimated $46.8 billion deficit – the second year in a row that the nation’s most populous state has a billion-dollar deficit.
Health care workers were supposed to get a raise on July 1 as part of a plan to gradually increase their pay to $25 an hour over the next decade. If lawmakers approve it next week, they could now get the raise on October 15 – but only if California’s revenues between July and September are at least 3 percent higher than officials estimate.
If this does not happen, the salary increase will not begin until January 1 at the latest.
The delay secures a hard-fought victory for one of the state’s largest unions — and one of the Democrats’ biggest campaign donors. Dave Regan, president of the Service Employees International Union-United Healthcare Workers West, said workers are disappointed they won’t get raises this summer.
“But we also recognize and appreciate that legislative leaders and the governor listened to us when we raised our voices this year and insisted that California’s patient care and health care crisis must be addressed despite a historic budget deficit,” he said in a statement.
The minimum wage for most people in California 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. That increase began in April and has statewide implications.
But raising pay for health care workers is more challenging because of the budgetary implications. California employs some health care workers and also pays for health insurance through the state’s Medicaid program.
The Newsom administration had previously said the minimum wage increase would cost the state about $2 billion, but if it is delayed until January, it will cost the general fund about $600 million – a figure that would increase annually by the planned increases until it reaches $25 an hour for most health care workers.
California’s state revenues have declined for much of the past two years, but have recently recovered.
“We are confident that the first pay raise for workers who have not yet received it will come in the fall,” Regan said.
Overall, the budget agreement calls for $297.9 billion in spending for the next fiscal year, which begins July 1. Newsom and legislative leaders agreed to $16 billion in cuts, including $110 million for a program that helps middle-class students pay for college and $1.1 billion for various affordable housing programs.
But Newsom and lawmakers agreed to abandon some previously proposed cuts, including one that would have ended payments for care for some disabled, low-income immigrants who receive Medicaid.
Lawmakers agreed to lend utility Pacific Gas & Electric $400 million to extend the life of the state’s only remaining nuclear power plant – money some lawmakers had opposed, fearing it might never be repaid.
And Newsom agreed to increase payments from the state’s Medicaid program to doctors for treating patients — although the amount is far less than he previously pledged. Meanwhile, doctors have approved for the November ballot a measure that would force the state to pay them more for treating Medicaid patients.
In addition to a nearly 8% cut across the board for state agencies, the agreement calls for additional $350 million in cuts for state prisons. It also calls for a momentary tax increase – starting this year and lasting 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 – it addresses the current deficit and strengthens long-term fiscal stability,” Newsom said.
Lawmakers are expected to vote on the budget next week. Republicans, who do not have enough seats to influence the legislation, say they have been shut out of the negotiations.
Acting Senate President Mike McGuire said it was a “tough fiscal year,” but elected officials succeeded in “reducing the deficit, protecting our progress and maintaining responsible reserves.”
Democratic Assembly Speaker Robert Rivas said the Assembly had “fought hard to protect the public services that matter most to Californians.”
