The Governor's Budget
In January 1989 Governor Deukmejian issued his budget for the 1989-1990 fiscal year, the first budget to include the Proposition 99 revenues. He recommended that the Health Education and Research Accounts be funded in accordance with the initiative. The Health Education programs received their full 20 percent—$175.6 million—for a new smoking prevention program administered by DHS. The Research Account received its full 5 percent—$43.9 million—for a research program administered by the University of California. The voluntary health agencies did not want to have the entire Health Education Account within DHS or have the university administer the Research Account, but the funding allocations at least followed the initiative.[40]
The controversial part of the governor's budget lay in his proposal to use Proposition 99's Hospital Services and Physician Services Accounts to pay for county medical services. His budget called for a $358 million reduction in state revenues to fund county programs to treat the medically indigent (a General Fund obligation) and then allocated $331.3 million of Proposition 99's tobacco tax revenues back to the counties
The governor also proposed using Proposition 99 funds to finance $54 million in unavoidable state obligations, such as health care costs associated with caseload increases, $14 million for various state prison programs, $18 million for capital outlay improvements in state mental hospitals, and $7 million for caseload increases in several categorical health programs. He also proposed expanding community mental health and drug treatment programs for female drug addicts. Some of these expenditures, such as those for prisons and for capital improvements in the state mental hospitals, were not consistent with Proposition 99, which required increases in medical services.
The governor's budget drew an immediate negative response from the press, the Coalition members, the Legislative Analyst's Office, and members of the Legislature. The CMA described the governor's proposal as a “shell game.”[41] A Los Angeles Times editorial labeled the Governor's action “The Big Raid,” stating, “This is not a pie for the health-care sponsors of that successful proposition to carve up for the benefit of each and every health-care provider. It must be used to address the priorities for which it was intended, to supplement and not to replace the existing resources. To do otherwise would betray the trust of the voters and violate the rule of law” (emphasis added).[42]
CMA president Laurens P. White loudly protested the fact that the governor was not using Proposition 99's medical service accounts to create, as the initiative specified, new programs expanding the pool of funds available for medical services. He emphasized the CMA's commitment to seeing that the politicians honored the will of the voters: “We are fearful that the administration's budget planners are using the proceeds from the cigarette tax increase approved last November to offset cuts made in the state's health programs. The CMA will work with members of the Prop. 99 Coalition to make sure that does not happen. When they approved the tax, voters believed they were increasing the amount of money available. We must keep faith with them” (emphasis added).[41] Although the governor had honored the terms of the initiative by fully funding the Health Education and Research Accounts (the top-priority activities for the voluntary health agencies), the agencies were willing to expend political capital over the supplanting issue—a priority
Assembly Member Lloyd Connelly, who had played a major role in creating Proposition 99, immediately requested a formal opinion from the Legislative Counsel (the Legislature's legal expert). He asked, “May revenues derived from taxes imposed pursuant to Proposition 99 be used to fund existing levels of service for these purposes authorized by Proposition 99 with a four-fifths vote of the Legislature?” The Legislative Counsel's February 24 opinion concluded that the Legislature could not legally fund existing services from these revenues and said that only the voters could change Proposition 99: “Unless an initiative statute grants the Legislature the power to amend or repeal the statute, the Legislature may amend or repeal the statute only by another statute that becomes effective when approved by the electors.”[43] Unified opposition forced the governor to back down.
In the end, the governor's initial proposal may not have been a significant threat to the program because Deukmejian, unlike his successor, fellow Republican Pete Wilson, felt bound to implement laws passed by the voters, even if he did not personally agree with them. According to Steve Scott, political editor of the California Journal, a widely respected nonpartisan monthly on California politics, “Deukmejian had an interesting attitude about initiatives. He got involved a lot in initiative campaigns. In fact, his staff would sort of get on him for getting involved…but by and large, his attitude was if the voters passed it, then the obligation of his administration was to implement it to the best extent possible. And so basically what I've been told recently is that Deukmejian pretty much let Kizer [director of DHS] do it his way.”[44]
The first challenge to the integrity of Proposition 99 was thwarted, protecting an important principle for the CMA and other medical service providers. Unfortunately, the CMA would not reciprocate and work with equal vigor to protect the Health Education and Research Accounts.