Medi-Cal Bills Pile Up Unpaid, Davis Complains

SACRAMENTO —  With legislators and the governor making no progress toward closing the state’s $3.6-billion budget gap, Controller Gray Davis said Monday that about $114 million in Medi-Cal payments have been stalled because the state’s check-writers lack the legal authority to pay the bills.

Davis also said the state, as of Monday, had spent $2.2 billion more than it took in during the 1989-1990 fiscal year. He predicted that when all the bills are paid and all the checks are counted, the government will finish the year with a deficit--perhaps as high as $500 million.

An emergency funding bill passed by the Legislature last week and signed Monday by Gov. George Deukmejian will allow the state to issue checks for renters’ tax credits and pay other bills that had been delayed. But Davis said the measure will not resolve the Medi-Cal problem because state law does not allow the controller to charge those payments back to the last fiscal year, which ended Saturday.

As a result, the doctors, hospitals and nursing homes that care for California’s poor will not be paid until a new budget is enacted. That could be days or even weeks.

The delay is forcing hospitals throughout California to borrow money to tide them over until the Medi-Cal payments arrive. Lori Aldrete, a spokeswoman for the California Assn. of Hospitals and Health Systems, said the blow is particularly hard for the hospitals to absorb because the state pays them an average of only 61 cents on the dollar for the care they render to the poor.

“It’s a double-whammy,” Aldrete said. “It’s a very bad situation for the hospitals.”

Deukmejian Administration officials, however, disputed the controller’s assessment on the Medi-Cal issue and said he was exaggerating the problems with the state’s overall fiscal health.

Finance Director Jesse R. Huff said the Administration believes the stop-gap bill Deukmejian signed Monday gives Davis all the authority he needs to pay the Medi-Cal providers. Huff added that the Legislature may soon pass another bill to straighten out the confusion.

“Our view of life is that the bills should be paid and he could pay them,” Huff said.

Huff accused Davis of trying to “confuse people” with his comments on the possibility of a deficit. Two years ago, Davis, a Democrat, and several other official state sources said Republican Deukmejian had ended the year in the red, but Deukmejian insisted that the year had ended with a small surplus. It appears that deficit dance might be repeated this year.

“We will be in the black,” Huff said, adding: “Not by very much.”

Davis, who once was chief of staff to former Gov. Edmund G. Brown Jr., seemed to take delight in dissecting Deukmejian’s fiscal difficulties. Deukmejian, referring to the financial crisis Brown handed to him when he took office in 1983, has often said that he took the state from “IOU to A-OK.”

Standing in the office where his employees cut the checks to the people owed money by the state, Davis said the state is “definitely not A-OK. Financially speaking, we are rapidly approaching the ‘ICU’--intensive care unit.”

Davis said the state has “nothing left in its checking account.” He said he is borrowing from special funds, such as the Highway Trust Account, to pay some bills. Without a new budget, he said, those funds will be exhausted around July 27 and he will be forced to issue warrants--IOUs--redeemable at a later date.

The two-house conference committee drafting a $56-billion budget for the 1990-91 fiscal year recessed Monday after coming up $2.9 billion short of what it will take to produce a balanced spending plan.

“We have made virtually no progress,” said Assemblyman William P. Baker (R-Danville).

The chairman of the committee, Assemblyman John Vasconcellos (D-San Jose), brushed off criticism from Republicans who said Democrats are too unwilling to cut deeply into state services. He said the proposed budget, even though it contains a deficit, is “more responsible than cutting people’s food supply, or health supply, or education supply.”

Also on Monday, about 100 disabled demonstrators crowded into Deukmejian’s office and tried to chain their wheelchairs together to protest proposed budget cuts. One of the governor’s cuts is $5.5 million for Independent Living Centers, a program that helps the disabled prepare for entering “mainstream” society.

State police with bolt cutters prevented the demonstrators from forming a barrier to Deukmejian’s office. Four protesters were arrested and cited for blocking a public building.

Sam Dardick, president of the Coalition to Save Independent Living Centers, said the proposed budget cutback could close 28 of the centers.

Times staff writers Douglas P. Shuit and Max Boot contributed to this article.