Governor Unveils Proposed Budget for FY 2024-25 

 California Governor Gavin Newsom unveiled his proposed fiscal year 2024-25 state budget on Wednesday, January 10th. Initial estimates from the Legislative Analyst’s Office put the state’s expected deficit near $68 billion in 2024-25. Fortunately, the California Department of Finance projections are more positive, estimating a $37.9 billion shortfall.  

The Governor proposes balancing the budget with a combination of using $13 billion from the state’s Rainy Day Fund, cutting spending by $8.5 billion, increasing revenue and borrowing up to $5.7 billion and deferring and shifting another $10.6 billion in spending. For years, California has been building a Rainy Day Fund for exactly this budget deficit situation. The fund currently has a balance of about $38 billion. The increase in revenue will be largely attributed to the new Managed Care Organization tax that is estimated to raise over $3 billion in the coming year.  

The Governor and the Legislature have until June 15th to finalize and pass a state budget for the new fiscal year, beginning July 1. LeadingAge California will be deeply involved in the budget process. 

Housing and Homelessness 

Much of the funding for homelessness services, such as the Homeless Housing Assistance Prevention Grant Round 5, Project HomeKey and Behavioral Health Bridge Housing, is protected in the proposed budget. Unfortunately, development funding for affordable housing will take a big hit if the Governor’s budget priorities are adopted. The budget proposes to cut the Multifamily Housing Program by $250 million and the Infill Infrastructure Grant Program by $200 million. The Department of Housing and Community Development has said that this will not impact awards under the current Super NOFA, but they were unable to say if there would be enough funding for a future Super NOFA later this year. State housing leaders confirmed that the Governor’s budget does not seek to renew the annual $500 million general fund investment in the four percent Low-Income Housing Tax Credit program. The four percent credit has been oversubscribed in recent years, and a lack of investment from the state will exacerbate this issue.   

The budget also seeks to delay $65 million for the Home Safe Program and $50 million for the Housing and Disability Advocacy Program to 2025-26. These are programs serving older adults experiencing or at risk of homelessness. 

Health Care Worker Minimum Wage and Workforce  

While the proposed budget does not outline changes to Senate Bill 525, it does suggest that the Governor will be working with the Legislature to put certain triggers in place to make the minimum wage increases subject to General Fund revenue availability and make other implementation clarifications. SB 525 was passed last year to increase the minimum wage for health care workers to $25 per hour. 

The Governor is proposing to delay $140.1 million to 2025-26 for health care workforce initiatives administered by the Department of Health Care Access and Information (HCAI). In addition, the budget proposes to revert $14.9 million in unexpended workforce initiative funding from HCAI.

Healthier at Home Pilot 

Perhaps one of the tougher pills to swallow in this budget is the proposed reversion of funds to support the Healthier at Home Pilot. In 2022, after three years of advocacy, LeadingAge California and LifeSTEPS were successful in securing an appropriation to fund a pilot of Healthier at Home. Healthier at Home would place Registered Nurses and Community Health Workers in affordable senior housing sites in eight counties over a three-year period. The California Department of Aging was expected to release the program RFP this quarter. Unfortunately, because the money has not been expended, the budget calls for a reversion of the $11.9 million remaining in the program. 

Medi-Cal and CalAIM 

The proposed budget is more positive for Health and Human Services programs, which fared well considering the expected deficit. The budget seeks to protect the Medi-Cal expansion to Californians regardless of immigration status. Additionally, it retains approximately $2.4 billion ($811.1 million General Fund) in FY 2024-25 to continue transforming the health care delivery system through the California Advancing and Innovating Medi-Cal initiative. Additionally, it maintains funding to allow up to six months of rent or temporary housing to eligible individuals experiencing homelessness or at risk of homelessness transitioning out of institutional care, a correctional facility, the child welfare system, or other transitional housing settings. 

One bright spot in the proposed budget is that it seeks to increase slots for the Assisted Living Waiver and the Home and Community-Based Alternatives Waiver, something LeadingAge California has been advocating in support of for over a decade.