Dan Walters

By Dan Walters
dwalters@sacbee.com
February 2, 2016 – 3:37 PM

  • California’s governor wants new taxes for health care, highways
  • Republicans oppose any new levies
  • The two proposals, however, are different

Within the Capitol – and the media that cover it – there’s a tendency to conjoin Gov. Jerry Brown’s two tax-increase proposals.

However, they are very different – structurally, politically and, in truth, qualitatively.

Brown wants the Legislature to re-enact, with some tweaks, a tax on “medical care organizations” whose proceeds generate additional federal financing for Medi-Cal, the state’s medical care system for the poor.

He also wants the Legislature to pass new taxes for much-needed maintenance and rehabilitation for state and local roadways.

The MCO tax issue involves a political Ponzi game. Health insurers have been paying a tax on the promise that the extra federal money would provide a net financial gain for taxpayers.

The feds, however, clamped down and said the qualifying tax would have to be much broader.

One political problem is that expanding the tax would hit entities that wouldn’t profit. Brown has offered a complex scheme involving offsetting corporate tax cuts, but so far has been unable to make a deal.

Another is that any tax would require at least a modicum of support from Republicans, and they are not disposed to vote for any tax, no matter how it’s packaged.

Brown contends that without the MCO tax there’s a billion-dollar hole in Medi-Cal financing, but that’s just a political argument, not a fact.

The state’s Medi-Cal share comes out of its general fund, which is running multibillion-dollar surpluses. Although Brown says failure to enact the tax would curb Medi-Cal services, it really has nothing to do with Medi-Cal and everything to do with the state’s overall fiscal condition.

To read expanded column, click here.