Things are getting awkward with the health care tax

BUDGET VS. BALLOT: A deal to pull a health care tax initiative from the November ballot looks increasingly unlikely just a few hours before the deadline.

Already, ads encouraging voters to approve “the health care initiative” are appearing on social media, a clear sign that the initiative will continue, and the coalition running the measure is firm that it isn’t going anywhere.

The ballot campaign — to funnel billions from a tax on health insurance plans to improve Medi-Cal — creates some awkward dynamics both within the health care world and between the campaign’s proponents and state leaders, who would rather determine how that money is spent — and who laid out a different plan for the money in the state budget. (A former top aide to Gov. Gavin Newsom recently left the campaign, stressing that he didn’t want to be associated with a campaign the governor was concerned about, as did a few other former Newsom officials.)

“Me, personally, I don’t want the ballot to pass because it would then negate everything that we fought for in the past year and a half worth of advocacy,” state Sen. Caroline Menjivar told POLITICO.

Last year, some of the biggest players in California’s health care scene came together to work out a deal on how to use the tax’s enormous proceeds — upwards of $20 billion plus federal funds. Groups who are often at odds, like SEIU and the California Hospital Association, united behind the idea that the money needed to stay in health care and strengthen the state’s Medi-Cal system. That deal became the ballot initiative.

But Newsom upended the agreement in May when he proposed using billions of the proceeds to backfill the state’s budget deficit — exactly the kind of decision the ballot measure aims to prevent. That opened the door for players who weren’t at the table, like legislators and smaller health care names, to assert their power in budget negotiations.

Notably, the final budget agreement included raises for professions that were left out of the ballot measure, including those with less lobbying sway such as private duty nurses, adult day center and community health workers.

Suddenly, those groups have something to lose if the ballot measure passes in November, nullifying the budget deal that included long-sought rate increases.

“It’s a hard spot to be in. I have always seen this through the really big lens of what’s best for the people we’re serving,” said Lydia Missaelides, the executive director of the California Association of Adult Day Services. “This sets up an uncomfortable dynamic, to be honest.”

The coalition that’s pushing for the ballot measure says it offers the system some much-needed predictability, and that there’s enough flexibility in the deal to contribute to spending what they want and still provide for the professions who may be “losing out.”

But the conflict between the budget and the ballot has created more room for dissent, potentially fracturing support for a measure that was expected to face little opposition.

Ronald Coleman Baeza, executive director of the California Pan Ethnic Health Network, said he was thrilled that the governor and legislators opened the tax deal back up in the budget, instead of just deferring to what the major players wanted.

“Having an initiative that hoards money to industry sponsors will ensure that their businesses can stay open and keep running,” Coleman Baeza said. “We remain concerned about locking down this money.”
IT’S THURSDAY AFTERNOON. This is California Playbook PM, a POLITICO newsletter that serves as an afternoon temperature check on California politics and a look at what our policy reporters are watching. Got tips or suggestions? Shoot an email to [email protected].

WHAT YOU NEED TO KNOW TODAY

CHAOS IN THE CHAMBERS: Debate on a bill involving transgender youth riled the Assembly this morning, with members exchanging tearful testimonies, harsh words and, at one point, almost coming to literal blows.

The proposal from Chris Ward would prevent schools from requiring their employees to share details about a student’s sexual orientation or gender identity without the young person’s consent. The bill touches on an issue playing out in school boards across California that has become a lightning rod for controversy — and a reliable source of conservative media attention for one spirited Republican member.

As he tried to give his opposition testimony on Assembly Bill 1955, the GOP lawmaker from Riverside got into a testy back-and-forth with speaker pro-tempore Jim Wood, who said the member was out of order because his testimony veered from the contents of the bill.

As Wood repeatedly told him he was out of order, the 38-year-old elected official insisted he was not, shouting his objections across the chamber even after his microphone was cut off.

Things had cooled down for a few minutes when the Riverside lawmaker lobbed an indiscernible comment that set off Corey Jackson, who tried to approach his Republican colleague but was physically restrained by fellow Democrats.

“You better watch yourself,” he said.

Wood called a recess.

Upon returning, several Democratic members proceeded with emotional testimonies about their personal experiences as LGBTQ+ youth. Assemblymember Evan Low broke down in tears recalling how his mother told him she’d disown him if he were gay. Lawmakers were reaching for tissues throughout the testimonies.

As Ward closed on the bill, members of the Democratic caucus left their seats to stand behind him. The bill passed, 60-15. It now heads to Newsom’s desk. — Lara Korte

IN OTHER NEWS

SPIN ROOM: After tonight’s presidential debate, be sure to watch out for some familiar California faces working the press on behalf of the president. Newsom and Rep. Robert Garcia were both tapped by the Biden-Harris administration to “speak to the stakes of this election and the clear contrast on the issues that will define it” like reproductive rights and strengthening the middle class, according to a campaign official.

SYNAGOGUE PROTEST: Attorney General Merrick Garland said today that the Department of Justice Civil Rights Division and other law enforcement agencies are collecting evidence from the protest outside a Los Angeles synagogue last weekend.

“Let me say both for the Jewish community and to those who would do it harm: The Justice Department will not tolerate criminal acts motivated by anti-Semitic hate,” said Garland, who choked up speaking about having relatives perish in the Holocaust and contemporary fears of antisemitism. — Melanie Mason

HOLD THE PRESSES: In a surprise development, the California Senate approved state Sen. Steve Glazer’s bill that would charge Big Tech to fund newsrooms, buoyed by unexpected support from a conservative lawmaker.

The legislation — which would funnel ad revenue from Meta, Amazon and Google into a $500 million tax credit aimed at helping help California newsrooms hire and employ journalists — was presumed dead when he pulled the measure from the Senate floor earlier this month.

But reports of the bill’s death were greatly exaggerated, or so we learned when Glazer brought his measure to the Senate floor today. His bill narrowly cleared the required two-thirds threshold on a 27-7 vote thanks in part to support from state Sen. Scott Wilk, the only Republican to support the measure. — Tyler Katzenberger

TORTURED BUDGET DEPARTMENT: Last month, we asked you, who is the Taylor Swift of the budget?

Well, reader, we have an answer.

Playbook has now learned that several staffers on the Assembly Budget Committee have a special connection to one of Swift’s most popular lyrics off her latest album, and even have multiple merch items with the phrase: “I cry a lot but I am so productive.”

Hopefully Budget Chair Jesse Gabriel doesn’t read into that too much. — Lara Korte

WHAT WE'RE READING TODAY

— Did you catch it? California’s massive state budget contains a hidden clause that lets state lawmakers exempt their new Capitol annex office building from state environmental law (LA Times)

— HIV infection rates are rising among young gay and bisexual Latino men, and health policy advocates say current efforts to fight the disease aren’t enough. (San Francisco Chronicle)

— The Supreme Court rejected a nationwide opioid settlement with OxyContin maker Purdue Pharma in a 5-4 decision today. It’s unclear what happens next. (POLITICO)

AROUND THE STATE

— Retiring UC Berkeley chancellor Carol Christ has some parting thoughts on protests, enrollment and housing. (Los Angeles Times)

— San Diego built more housing in 2023 than it did in the preceding 17 years. (San Diego Union-Tribune)

— Some Latinos say Fresno Police Chief Paco Balderrama — who resigned Tuesday amid an investigation into an alleged inappropriate relationship with a subordinate’s wife — deserves a second chance. (Fresno Bee)

— compiled by Tyler Katzenberger