The Governor's 1994-1995 Budget

Repeating the pattern he had established in prior years, Governor Pete Wilson drew up a budget that again called for diverting Health Education and Research funds to medical services, only at a higher rate. Perhaps in response to the bad press that the administration received when the American Lung Association (ALA) won its case over the media campaign, Wilson proposed giving the media campaign Section 43 protection, which meant that the media campaign would not be cut to get money for the protected medical programs. This decision would mean, however, that the local lead agencies (LLAs) and other local programs would be hit even harder by any Section 43 reductions. Following caseload adjustments and diminishing revenues, the governor's budget cut LLA funding from $20 million in 1993-1994 to $15 million in 1994-1995, competitive grants were dropped from $15 million to $10 million, and funds for schools from $22 million to $16 million. In total, the governor proposed that Health Education programs get only 12.7 percent of the total tobacco tax revenues instead of the 20 percent required by the initiative.

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In one of the few instances in which the Public Resources Account was threatened, the governor proposed a redirection of some Public Resources funding to the Child Health and Disability Prevention Program (CHDP). The governor proposed full funding for the Research Account, although there was no mention of the six months' worth of funds that had not been spent in the prior year.

In the governor's budget summary under “Preventive Services” the tobacco education program was not mentioned, despite its success. Instead the governor mentioned Healthy Start, Access for Infants and Mothers (AIM), and Education Now and Babies Later, among others. In describing the need for perinatal substance abuse services, alcohol and other drugs were specifically mentioned, but not tobacco.^[2] The Wilson administration had no desire to draw public attention to tobacco.

Wilson also tried to quiet opposition from the ALA and Senator Watson's office. A top Wilson administration official held a secret meeting in which she threatened to “cripple” the implementation of the Proposition 99 programs if Najera and Miller did not accept the diversions demanded by Wilson. Wilson's representative threatened to seek out “the most stupid, incompetent, belligerent bureaucrats” she could find and put them in charge of tobacco education. Further, all the committed and effective members of the TCS staff would be reassigned to a regulatory “Siberia.”^[3] In fact, although the TCS staff was not replaced, the Wilson administration had already slowed the media campaign and would continue to hobble the program administratively until Wilson left office in 1999.

The hypocrisy of the argument that the state's budget problems made it necessary to divert money from the Health Education Account to medical services was exposed when the Legislative Analyst reviewed the governor's proposal for AIM. The analyst noted that AIM, the program which provided subsidized private health insurance for poor pregnant women, cost more money than providing the same services through MediCal, the state's Medicaid program. Moreover, AIM yielded worse clinical outcomes than MediCal.^[4] Thus, the state was paying more money to get worse outcomes in terms of serving this population. The analyst proposed that AIM be discontinued and the services be provided by expanding MediCal eligibility.

Implementing the Legislative Analyst's proposal to switch from AIM to MediCal would have saved $74 million dollars, more than was being diverted out of the Health Education Account. Thus, changing programs

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could give better pregnancy outcomes and save enough money to avoid diversions from the Health Education Account for medical services. AIM, however, was to be preserved. It paid higher reimbursements to providers and involved the private insurance sector, which meant that it had powerful friends, especially the California Medical Association (CMA).