California Democrats Agree to Delay Raising Minimum Wage for Health Care Workers

California Democrats agreed to delay a minimum wage increase for about 426,000 health care workers to help balance the state’s budget.

The agreement between Gov. Gavin Newsom and legislative leaders is part of a broader plan to close an estimated $46.8 billion deficit, the second straight year the nation’s most populous state has had a multibillion-dollar deficit.

Health care workers were supposed to receive a raise on July 1, as part of a plan to gradually increase their pay to $25 an hour over the next decade. Now, if the Legislature approves it next week, they could get that increase on Oct. 15, but only if California’s revenues between July and September are at least 3% higher than officials have estimated.

If that doesn’t happen, the increase won’t start until January 1 at the latest.

The delay preserves a hard-fought victory for one of the state’s largest unions and one of Democrats’ biggest campaign donors. Dave Regan, president of the Service Employees International Union-United Healthcare Workers West, said workers are disappointed they won’t receive raises this summer.

“But we also recognize and appreciate that legislative leaders and the Governor listened to us when we stood up and spoke out this year to insist that, despite a historic budget shortfall, the patient care and workforce crisis must be addressed. California healthcare,” he said in a statement.

The minimum wage for most people in California is $16 an hour, which is already among the highest in the country. The minimum wage for most fast food workers in the state is $20 an hour, an increase that began in April and has had ripple effects across the state.

But raising salaries for health care workers is more complicated because of the budget impact. California employs some healthcare workers and also pays for medical benefits through the state’s Medicaid program.

Newsom’s administration had previously said raising the minimum wage would cost the state about $2 billion. But if it is delayed until January, it will cost the general fund about $600 million, a figure that would increase annually to reflect scheduled increases until it reaches $25 an hour for most health care workers.

California’s revenues, while declining for much of the past two years, have recently recovered.

“We are confident that the initial increase for workers who have not yet received it will occur in the fall,” Regan said.

In total, the budget deal would approve $297.9 billion in spending over the next fiscal year that begins July 1. Newsom and legislative leaders agreed to $16 billion in cuts, including $110 million for a program that helps students from middle-class families pay for school. university and $1.1 billion in various affordable housing programs.

But Newsom and lawmakers agreed to abandon some previously proposed cuts, including one that would have stopped paying people to care for some low-income disabled immigrants who receive Medicaid.

Lawmakers agreed to lend $400 million to utility Pacific Gas & Electric to help extend the life of the state’s only remaining nuclear power plant, money that some lawmakers had opposed because they feared it would never would be returned.

And Newsom agreed to increase the amount the state’s Medicaid program pays doctors to treat patients, although the amount is far less than he had previously agreed to spend. Meanwhile, doctors have qualified a measure for the November ballot that would force the state to pay them more to treat Medicaid patients.

In addition to an across-the-board cut of nearly 8% for state agencies, the deal includes an additional $350 million cut for state prisons. It also includes a temporary tax increase, starting this year and continuing through 2026, for businesses with more than $1 million in taxable income.

“This agreement puts the state on a path to long-term fiscal stability, addressing the current deficit and strengthening budget resilience into the future,” Newsom said.

Lawmakers are likely to vote on the budget next week. Republicans, who do not control enough seats to influence the legislation, say they were left out of the negotiations.

Senate President Pro Tempore Mike McGuire said it has been a “difficult budget year” but that elected officials were able to “reduce the deficit, protect our progress and maintain responsible reserves.”

Democratic Assembly Speaker Robert Rivas said the Assembly “fought hard to protect the public services that matter most to Californians.”

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