MOORLACH UPDATE — SB 1273 and MCO Tax — February 27, 2016

On Thursday evening we had a wonderful event at the Lighthouse Bayview Cafe in Marina Park, which allowed me to file my re-election papers Friday afternoon. Thank you to everyone who was able to come and participate. I am most grateful for your friendship and support. Thanks, too, to our host, Doug Cavanaugh, CEO of the Ruby’s Restaurant Group, for allowing us to commandeer their beautiful new facility.

Yesterday morning provided a wonderful opportunity to participate in the first press conference for one of my fourteen bills for this Session. St. Joseph’s Hospital, where both of my sons were born, provided the venue. Senate Bill 1273 seeks to clarify the ability to access Proposition 63 funding to provide emergency psychiatric beds. It is a natural outgrowth from my efforts as a County Supervisor where I found an existing revenue stream to implement Laura’s Law (AB 1421, 2002), allowing those with mental illness who have been incarcerated to be directed to participate in an assisted outpatient treatment program.

This was done by encouraging former President Pro Tem of the State Senate, Darrell Steinberg, to write SB 585 (2013). Senator Steinberg was the author of Proposition 63, the Mental Health Services Act, which was approved by the voters in 2004. It taxes those with taxable income of one million dollars or more an additional one percent, with these revenues designated to assist those with mental illness. Unfortunately, it was for new programs and not to supplement existing services. SB 585 changed this in a small way. It allowed for allocating some of these revenues towards funding the implementation of Laura’s Law (see MOORLACH UPDATE — Laura’s Law Journey — August 11, 2014 august 11, 2014 john moorlach).

Current President Pro Tem Kevin de Leon is now using this strategy to attempt to build immediate housing for mentally ill homeless individuals (see MOORLACH UPDATE — More Prop. 63 Repurposing — January 6, 2016 january 6, 2016 john moorlach).

MyNewsLA provides the City News Service piece on the announcement of SB 1273 in the first piece below. provides a press release by the Republican Senate Caucus in the second piece. This has been an ambitious project that my office has been working on for quite some time. It is a major priority of mine and we have had another wonderful collaboration with the County, its Health Care Agency, the County’s hospital and physician associations, and the cities’ Chiefs of Police Association (as it will allow for a place to deliver those experiencing a mental health crisis by our public safety officials).

I’m looking forward to shepherding this bill through the Legislative process to assist those who need this care, thus freeing up more emergency room beds for others.

Now, back to the MCO tax. The San Diego Union-Tribune‘s Steven Greenhut weighs in on the subject in the third piece below. I am complimented by his referring to my last UPDATE (see MOORLACH UPDATE — MCO Tax and SB 1253 — February 25, 2016 february 25, 2016 john moorlach). On a more somber note, I’m also honored to be mentioned in his last piece for the San Diego U-T.

Let me share a few additional thoughts on the proposed MCO tax that I did not cover in my last UPDATE. The first is the limited time that has been provided to vet this special session bill. I recommended that MCOs be provided a tax credit in order to minimize the tier concept that was initially proposed last year. I’m glad that my recommendation has been implemented in a similar vein. Unfortunately, we have not been provided with the details on how the bill will impact the for-profit health care providers.

One problem is that their tax information is proprietary and unavailable. The other problem is that no one can predict what their premium taxes and taxable income will be for the next two years. Consequently, no one knows if the bill is good for consumers, the for-profits or the State of California’s net tax revenues. I know it is nice to assume that it will all work out. But, this is a very complex arrangement that deserves a less rushed analysis.

Secondly, it is awkward when someone asks you to give them money in order for you to receive more money back. It works on the greed principle. Most of the time, an individual gets sucked in, gives the money, and never sees the person who promised the windfall again. It’s a classic con man scheme. Grant programs I understand. But paying something up front to get more back is something scammers do.

Thirdly, as it is next to impossible to determine if premiums will be negatively impacted by this scheme, it would be easy to infer that any such increases could be blamed on the MCO tax increase. I’m not here to frustrate taxpayers who already find their medical premiums unaffordable (wasn’t it called the Affordable Care Act?).

Fourth, I find it awkward to observe colleagues who are attempting to obtain something for their Districts for their votes. Maybe their District really needs something specific. Maybe the demographics of their District requires them to support the tax. I can only speculate. But, it does create a strange smell over the process.

Finally, why are we bending over for a crazy and expensive health care solution thrust upon the Federal government and the nation? This Obamacare nonsense will fail by the sheer weight of its oppressiveness. And that’s all I’m going to say about that.

Obviously, this will not be a policy discussion, but a political one. Monday’s Floor Session will be a memorable one.

Counties could help mentally ill more with Prop. 63 fix, Moorlach says


State Sen. John Moorlach, R-Costa Mesa, announced a bill Friday that would give counties more flexibility when spending funds earmarked for mental health services.

State Sen. John Moorlach. Photo via johnmoorlach.wordpress.comState Sen. John Moorlach. Photo via johnmoorlach.wordpress.comMoorlach’s bill would expand what local jurisdictions can spend from their share of Proposition 63 funding.

“Prop. 63 is very limited in the way it can be spent and so our county is getting its emergency rooms clogged up and they don’t have enough psychiatric beds,” Moorlach told City News Service. “Our county doesn’t even have a designated place for psychiatric beds.”

Moorlach hopes the county can use its share of the Prop. 63 money to build a psychiatric ward that would function as an emergency room for patients “with a mental health crisis,” the senator said.

“It’s just a way to change the state code just a little bit so the county of Orange and others can feel comfortable reallocating funding,” Moorlach said.

Because the funding is restricted to “new services,” sometimes the money is spent on things such as coloring books,Moorlach said.

“So it hasn’t been anything that would really help,” he said.

Moorlach has already gotten good feedback from Democrats on his proposal, he said.

“I expect a lot of support from Dems once it’s heard in committee,” he said.

Last month, Moorlach joined an effort with former state Sen. Darrell Steinberg, former president Pro Tem, and state Sen. Kevin de Leon, D-Los Angeles, to help with a plan to create housing for the mentally ill.

When Moorlach was on the Orange County Board of Supervisors he championed the adoption of Laura’s Law, which gives officials the authority to place the mentally ill in treatment even if they do not wish to do so.

— City News Service

California Senate Republican Caucus: Senator Moorlach Announces Bill to Make Mental Health Funds More Flexible, Efficient

At a news conference today at St. Joseph’s Hospital in Orange, California, State Senator John Moorlach (R-Costa Mesa)announced that he has authored Senate Bill 1273 (link is external), which will give the County greater flexibility over use of Mental Health Services Act funds.

Senator Moorlach was joined by Orange County Board of Supervisors Chairwoman Lisa Bartlett, Orange County Supervisor Andrew Do, St. Joseph Hospital President and CEO, Steven C. Moreau, Tustin Police Chief Charles F. Celano, Jr., Dr. Peter Anderson, Physician, Orange County Medical Association (OCMA) Representative for Supervisors Behavioral Health Ad Hoc, and several others.

SB 1273 clarifies that counties have the flexibility to use mental health services funding for crisis stabilization services for individuals who are experiencing a mental health emergency, particularly for individuals placed on a temporary 5150 mental health hold. This will help ensure that patients in mental crisis can receive quicker care at proper facilities, rather than the hospital emergency room.

For more information, CLICK HERE.

California Senate Republican Caucus issued this content on 26 February 2016 and is solely responsible for the information contained herein.

Tax battle about more than semantics

State GOP asks: When is a tax hike not a tax hike?

Mugshot of Steven Greenhut
By Steven Greenhut

Before the 1984 Republican National Convention in Dallas as Ronald Reagan prepared to run against Walter Mondale, a feisty debate took place among those that drafted the party’s political platform. In their biography of Jack Kemp, authors Morton Kondracke and Fred Barnes write about the so-called “Battle of the Comma.”

Tax-cutting “supply-siders” such as Kemp wanted the platform to oppose “any attempt to increase taxes, which would harm the recovery … .” Some GOP insiders, they wrote, wanted the comma removed. The first group was against any tax increases, which they argued would always harm the recovery. The other side was only against those specific tax increases they believed would harm the recovery. The comma prevailed.

I was reminded of that battle as California Republican leaders prepare for a coming fight over a tax measure that is scheduled to come to the Capitol on Monday. The one thing that has united Republicans has been their opposition to increasing taxes. Those GOP legislators who have crossed the aisle to support tax hikes have often become ex-legislators. The latest battle isn’t focused on a punctuation mark, but on a simple question:

When is a tax increase not a tax increase?

The issue centers on a measure proposed by Gov. Jerry Brown and the state’s Democratic leadership dealing with managed-care organizations (MCOs). Currently, the state imposes a tax on managed-care organizations that participate in California’s Medi-Cal program that provides health care to poor people.

But the Obama administration rejects that approach and insists the California government tax all MCOs, or lose more than $1 billion in federal reimbursements. The MCO plan would increase the tax across the board in order not to leave federal money on the table. It would reduce other taxes on health organizations, thus leaving the tax-hike question unanswered.

In 2010, California voters approved Proposition 25, which allows the Legislature to pass a budget with a simple majority vote. But the majority still needs a two-thirds vote for tax increases. The same year, voters also approved Proposition 26, which helped answer a similar question to the one being debated right now: What is a tax hike? Previously, a simple majority was needed if a tax package was revenue neutral. Prop. 26 required a two-thirds vote on any bill that raised anyone’s taxes even if other taxes were reduced at the same time.

Republican votes are therefore needed on this MCO tax plan. Republican Assembly Leader Chad Mayes of Yucca Valley has backed it, although Senate Republican Leader Jean Fuller of Bakersfield has not. The extra federal dollars would help fund a Republican legislative priority – assistance for the developmentally disabled.

Tax opponents complain the governor is holding hostage such funding for the disabled. There’s no reason, they say, to tie spending for these programs to the health-care tax hike. They don’t like the idea of sending California tax dollars to Washington, D.C., then having to comply with federal rules to get the money returned to the state. They note that federal reimbursements are indeed tax dollars – and make a broader argument against excessive government spending and the fruits of insider deal making in the context of the national political scene.

“It is exactly the kind of crappy deal that is driving Republican voters nuts,” wrote Jon Fleischman, publisher of the Republican-oriented, in an open letter to GOP legislators. “We campaigned on holding the line against tax increases. … And that path is clear – just say no. The MCO multi-billion dollar tax increase simply ends, and killing that tax becomes symbolic and a momentum-builder heading into the November election.”

State Sen. John Moorlach, R-Costa Mesa, complained about Democrats referring to the tax as a no-brainer when they continue to fund costly and controversial projects such as the high-speed rail system. That shows how this issue has become a touchstone for broader debates about state spending – and is a line in the sand early in the new session.

However, one of the key allies in most California anti-tax battles, the Howard Jarvis Taxpayers Association, sent a letter to Republican leaders earlier this month explaining its neutral stance even though the Legislative Counsel views the MCO plan as a tax increase: “Just because a bill is keyed as a tax increase by Legislative Counsel does not necessarily compel the conclusion that it reflects bad policy. Otherwise, California’s tax code would be cast in stone.” It reiterates its opposition to “tax increases impacting citizen taxpayers.”

So the main questions remain: Will California Republicans oppose any tax increases, which impact citizen taxpayers? Or will they oppose any tax increases which impact citizen taxpayers? We’ll probably see on Monday.

(This is my last California column. I am moving on to lead the Sacramento-based Western division of the R Street Institute, a Washington, D.C.-based free-market think tank.)

Greenhut is the Union-Tribune’s California columnist.


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