California Democrats agreed to postpone a minimum wage increase for about 426,000 health care workers in an effort to balance the budget.
by
Adam Beam Associated Press
June 22, 2024 2:32 PM ET
• 4 min read
SACRAMENTO, Calif. — California Democrats have agreed to postpone a minimum wage increase for about 426,000 health care workers in an effort to balance the state's budget.
The agreement between Gov. Gavin Newsom and legislative leaders is part of a larger plan to close an estimated $46.8 billion budget shortfall, marking the second consecutive year that the nation's most populous state has run a multibillion-dollar deficit.
California health care workers were due to get a pay raise on July 1 as part of a plan to gradually raise wages to $25 an hour over the next decade. If approved by the state Legislature next week, they could get the raise on Oct. 15, but only if Californians' earnings from July through September are at least 3% higher than state officials estimate.
If that doesn't happen, the pay increases wouldn't begin until Jan. 1 at the earliest.
The delay protects a hard-won victory for one of the state's largest labor unions and one of the Democratic Party's biggest campaign donors. Dave Regan, president of the Service Employees International Union/Western Coalition of Healthcare Workers, said workers are disappointed that they won't get a raise this summer.
“But we recognize and appreciate that legislative leaders and the governor listened to us when we mobilized and spoke out this year to address the patient care and health care workforce crisis in California, despite our historic budget deficit,” he said.
Most Californians make a minimum wage of $16 an hour, already one of the highest in the U.S. Fast-food workers in California make a minimum wage of $20 an hour, a rate that began rising in April with ripple effects across the state.
But raising wages for health care workers is harder because of the impact it would have on the state's budget, as California both employs them and pays for their health care benefits through the state's Medicaid program.
The Newsom administration had previously said the minimum wage increase would cost the state about $2 billion, but delaying the increase until January would cost the state's general fund about $600 million — a figure that would rise each year to reflect the scheduled increases until the minimum wage for most health care workers reaches $25 an hour.
California's revenues have been declining for most of the past two years but have been recovering recently.
“We are confident that the first pay increases will be implemented in the fall for workers who have not yet received a pay increase,” Regan said.
The budget agreement would authorize a total of $297.9 billion in spending for the next fiscal year, which begins July 1. Governor Newsom and legislative leaders agreed to $16 billion in cuts, including $110 million to a program that helps middle-class students pay for college tuition and $1.1 billion in cuts across a variety of affordable housing programs.
However, Governor Newsom and lawmakers agreed to abandon some previously proposed budget cuts, including an end to payments to caregivers of low-income, disabled immigrants on Medicaid.
Lawmakers agreed to lend Pacific Gas & Electric $400 million to extend the life of the state's only remaining nuclear power plant, but some lawmakers opposed the loan, fearing the state might not be able to repay it.
Newsom also agreed to increase the amount the state's Medicaid program pays doctors for treating patients, an amount he previously proposed to cut, despite concerns from lawmakers that it would only exacerbate the shortage of doctors willing to treat Medicaid patients. The increase could be reversed depending on the outcome of the November vote.
“This agreement puts the state on a path to long-term fiscal stability, addressing our current budget deficit and strengthening our budget resiliency in the future,” Newsom said.
Lawmakers are expected to vote on the budget this week, and Republicans, who don't have enough seats to influence the bill, say they've been left out of negotiations.
Senate President pro tempore Mike McGuire said this has been a “challenging budget year,” but that elected officials were able to “narrow our shortfall, protect our progress and maintain responsible reserves.”
Democratic State Assembly Speaker Robert Rivas said the Legislature “fought hard to protect the public services that matter most to Californians.”
