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Who takes home more cash under California’s budget deal — and who pays more?

‘Time for the individual mandate.’ How Gov. Gavin Newsom wants to expand health care

During his budget presentation in January 2019, Gov. Gavin Newsom outlined his plan to expand subsides for health care coverage to more Californians by restoring the individual mandate. He also plans to expand health care for undocumented residents.
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During his budget presentation in January 2019, Gov. Gavin Newsom outlined his plan to expand subsides for health care coverage to more Californians by restoring the individual mandate. He also plans to expand health care for undocumented residents.

California Gov. Gavin Newsom’s first state budget steers billions of dollars to programs that help undocumented immigrants, new parents and low-income taxpayers.

He calls it a “California for All” budget that eases burdens on lower income and middle class residents in the expensive state. But there’s a cost to the new programs, and many Californians will see new fees if the deal lawmakers released on Sunday passes the Legislature and is signed by Newsom.

Here’s a look at which Californians will take home more money next year, and who will pay more:

Who benefits?

Women and young families

The budget deal includes funding to increase the state’s paid family leave plan from six to eight weeks. Lawmakers on Sunday also proposed increasing the pay replacement from 60 percent of wages to 90 percent of wages.

The budget would end sales taxes on diapers and feminine hygiene products like tampons for two years.

Female lawmakers who had tried to end the taxes for years, arguing they place an unfair burden on women and young families, had pushed for the tax breaks to extend beyond two years. But they didn’t prevail in the final budget compromise.

Low-income households with kids

Newsom’s budget makes about 3 million California households eligible for the state’s earned income tax credit, a benefit that gives lower-income families as much as $2,559 a year.

Lawmakers on the Budget Conference Committee on Sunday agreed to Newsom’s plan in general, but specific details are subject to change.

Newsom wanted to create an additional $1,000 credit for qualifying families with children under age 6, and makes more households eligible for the California earned income tax credit by raise the maximum qualifying income to $30,000.

Altogether, the changes would cost $1.2 billion a year. In 2017, about 1.5 million California households claimed the credit and collectively received about $350 million, according to the Legislative Analyst’s Office.

“I would consider it yet another pro-family policy that’s in the best interest of California,” Sen. Holly Mitchell, D-Los Angeles, said at a recent budget hearing.

Undocumented immigrants

Undocumented immigrants under 26 will be newly eligible for Medi-Cal, California’s health insurance program for low-income people, at a cost of about $98 million to the state. To qualify, they will need to make less than 138 percent of the federal poverty level, which is about $17,200 for an individual or $35,500 for a family of four.

Undocumented children are already eligible for the program until they turn 19. The budget deal extends their eligibility by seven years.

Cynthia Buiza, executive director of the California Immigrant Policy Center, said the deal was “bittersweet.” The group has also pushed for lawmakers to expand Medi-Cal to undocumented seniors. But she praised lawmakers for expanding coverage to young adults.

People struggling to afford health care

Middle-income people, seniors and low-income people will all get new help paying for health care under the budget deal.

The budget includes about $1.45 billion over the next three years to help middle-income people afford health insurance. The bulk of the funding will go to people making between 400 and 600 percent of the poverty level, which is between $103,000 and $154,000 for a family of four.

Families in that range currently aren’t eligible for government subsidized health insurance, but California lawmakers and some advocacy organizations argued the Golden State’s high cost of living means even middle-income people need help buying insurance. People making between 200 and 400 percent of the poverty level will also receive state subsidies on top of the federal assistance they already qualify for.

Who pays?

Employees

To pay for additions to the state’s paid family leave plan, lawmakers and Newsom plan to use money from reserves and from the state’s payroll tax.

The governor’s Department of Finance estimates the expansion of paid family leave from six to eight weeks will cost an additional $350 million next year. It has not released a detailed description of how it would be funded.

Assemblyman Jay Obernolte, R-Big Bear Lake, said expanding paid family leave would be a significant burden on Californians’ paychecks.

“In the discussion we’ve been having, we’re pretending that this has no cost, but it really does,” he said during the discussion in the Budget Conference Committee where lawmakers gave the deal initial approval.

People who don’t buy health insurance

To pay for most of the middle-income subsidies, California will fine residents who don’t buy insurance. The so-called individual mandate requiring people to buy coverage or pay a penalty was first enacted through the federal Affordable Care Act, also known as Obamacare.

The state-level mandate will be based on the federal mandate. In 2016, the penalty was $695 per adult or 2.5 percent of yearly household income, whichever was higher.

The Newsom administration projects that the mandate will raise about $1 billion over three years.

People who fall below a certain income threshold would be exempted from paying the penalty, but a mandate would still disproportionately affect people in lower- and middle-income tax brackets, according to an analysis by the USC Center for Health Journalism Collaborative.

Anyone with a phone

The budget deal also includes an 80 cents per month fee on phone bills to fund upgrades to the state’s 911 system.

The money would be aimed at upgrading the state’s outdated system to “Next Generation 911,” which would have more accurate call location data and expanded texting capabilities.

Businesses

California businesses would lose some tax write-offs if lawmakers agree to a proposal that would make part of the state’s tax code conform with the federal tax overhaul that President Donald Trump signed in 2017. The changes would raise about $1.4 billion a year, which Newsom wants to use to pay for the earned income tax credit expansion.

Business organizations and the California Taxpayers Association are neutral on the proposal. Details are still being worked out, although the Legislature’s Budget Conference Committee agreed to the concept in a vote on Sunday night.

Adam Ashton contributed to this report.

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Sophia Bollag covers California politics and government. Before joining The Bee, she reported in Sacramento for the Associated Press and the Los Angeles Times. She grew up in California and is a graduate of Northwestern University.

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