Whoops! California Dept of Finance Made $1.8 Billion Error

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Newport Beach, CA

The California Department of Finance told Breitbart News that they did not discover a negative $1.8 billion cost error in calculating the state budget, signed by Gov. Jerry Brown on June 27, until after the November 8 elections.

In a testy hearing in front of the Joint Legislative Budget Committee on January 17, Gov. Brown’s Chief Deputy Finance Director, Amy Costa, tried to explain away a negative $1.4 billion understatement of California’s portion of the cost to fund healthcare for the poor as, “The math was wrong.” [Breitbart News has discovered the wrong math is actually an additional $1.8 billion cost.]

Under questioning from the Senate committee, Ms. Costa stated that the Brown administration discovered the Medi-Cal error last fall, but she acknowledged that they did not tell the legislature until January 10, and only learned of the math at the hearing.

That set off a storm of rumors in Sacramento that the Brown administration may have sandbagged voters on November 8, by claiming the budget would have a big surplus.

One the key election talking points that propelled Democrats to capture a super-majority in both houses of the California state legislature on November 8, was their supposed willingness to balance budgets and create a huge “rainy-day fund” by making the hard choice to put Proposition 55 on the ballot to extend a temporary tax increase on the wealthy.

California’s non-partisan Legislative Analyst Office (LAO) was not told about the $1.8 billion in additional healthcare spending liability when they projected a “positive” budget outlook on November 16.

The LAO did warn that the “projected surplus signals a likely showdown between Brown, who prefers cautious spending growth to prepare for a recession, and Democratic legislators eager to expand state services for people in need.”

Assembly Democrats responded to the LAO’s post-election forecast by proposing a $1 billion spending spree to expand the state earned-income tax credit, implement mandatory full-day kindergarten and reduce college tuition costs.

According to a phone interview with Department of Finance staff, although they began the budget review in early November, they are adamant that they did not discover $1.8 billion additional cost to fund Medi-Cal costs until after Election Day.

The Department of Finance sent Breitbart News a letter titled, “Notification of Intent to Fund Unanticipated Costs through Supplemental Appropriations Bill—Department of Health Care Services.” The memo signed by Ms. Costa, states that the General Fund must spend an additional $1,805,065,000 for a rebate to the federal government and for a “miscalculation of costs associated with the Coordination of Care Initiative.”

In addition, Gov. Brown recently  announced that for the first time since 2012, the state’s $122.8 billion General Fund Budget is now in deficit by $1.6 billion.

Despite California tax collections increasing by $43 billion over the last 9 years, Gov. Brown intends to fund the $1.6 billion deficit by proposing a 42 percent increase in gasoline taxes and a 141 percent increase in vehicle registration fees. The governor has not disclosed how he will pay for the additional $1.8 billion in new Medi-Cal costs.