Governor’s Vetoes Poke Lawmakers On Special Session Failure

In a series of bundled vetoes, Gov. Jerry Brown sent a hard-to-miss weekend message to state legislators: You dropped the ball before leaving Sacramento for 2015.

Brown took action on 80 bills on Saturday, signing landmark legislation on everything from voter registration to farm animal antibiotics. But in a handful of vetoes, the governor quickly brushed aside efforts by Democrats in the California Legislature that he contended were fiscally unwise in light of a big item left on their legislative to-do list.

That item is the crafting of a replacement for the state’s existing tax on managed-care plans that participate in the Medi-Cal program.

Last summer, federal officials decreed that California’s managed care organizations (MCO) tax will no longer be allowed after 2016, andanalysts have warned that failing to restructure the tax could result in a loss of some important federal Medicaid funding.

But reworking the MCO tax proved to be no easy task this summer, even after the governor called a special legislative session to deal with the issue. New taxes require a supermajority vote of both legislative houses, and Republicans were in no mood to put up the necessary votes on the MCO tax — even when Democrats attempted to link the tax to programs that GOP legislators supported.

Regardless of whether that inaction represented a failure on the part of Democrats or a fact of life when it comes to bipartisan tax votes, Brown pointed to the MCO tax standoff as the reason he vetoed 15 separate bills on Saturday.

“Without the extension of the managed care organization tax that I called for in special session,” wrote Brown, “next year’s budget faces the prospect of over $1 billion in cuts.”

The governor vetoed bills related not just to Medi-Cal, but also to a handful of new tax credits Democrats hoped to put on the books.

Those tax breaks included incentives on creating low-income housing, increasing food bank donations, and more. While rarely talked about during legislative debates extolling their virtues, tax credits nonetheless reduce the revenues that come in to state coffers. And Brown was all too happy to point that out in a blanket veto message.

“I cannot support providing additional tax credits that will make balancing the the state’s budget even more difficult,” he wrote.

The other blanket veto came on bills directly related to Medi-Cal, including ones that would have added new health benefits for California’s working poor. They included a program to kick tobacco addiction, home visitation programs for pregnant women or new parents, and a new Medi-Cal reimbursement system for rural health clinics.

Democrats and activists grumbled about the vetoes on Saturday, especially when it came to Brown’s rejection of a five-year, $100 million annual expansion of an existing low-income housing tax credit.

“This investment would have produced thousands of badly needed affordable units for our workforce, created thousands of well-paying jobs, and also brought $200 million more in federal resources to our state each year,” said Assembly Speaker Toni Atkins, D-San Diego, in a statement. “I am deeply disappointed we will not realize these benefits.”

Ray Pearl, executive director of the nonpartisan California Housing Consortium, was more blunt: “Affordable home builders in the state are dismayed by this shortsighted decision.”

The affordable housing tax credit, in particular, was sent to the governor’s desk on a unanimous vote in the Assembly and a near-unanimous vote in the Senate. But in a state Capitol where veto overrides have been nonexistent for decades, Brown’s singular voice has the final say. And fiscal prudence, at least in the way he defines it, has been the governor’s constant rallying cry since returning to the statehouse in 2011.

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