California Democratic lawmakers are in talks to push a proposed new tax on major corporations such as Amazon and Walmart to help with the state's health care expenses. Multiple sources in the Assembly and Senate confirmed to KCRA 3 Democrats have been discussing this along with a variety of other tax hikes as lawmakers work to figure out how to close a budget gap of at least $12 billion this year, and expected shortfalls in the billions in the years ahead.A major contributor to the state's deficit this year has been the overflowing costs to the state's Medicaid system, known as MediCal. Lawmakers and Gov. Gavin Newsom recently expanded the program to provide health insurance to low-income undocumented people, which ended up costing billions more than expected and was partially to blame for the governor's back-to-back loan requests to cover some of the costs. The state this year is expected to spend about $11 billion on the program, according to state budget documents. The governor is now proposing new limits on the health coverage for undocumented people and some Democratic state lawmakers have been pushing back. That pushback may materialize into a new proposed penalty or tax for major corporations that don't provide health insurance to their lowest-paid employees. The proposal would impose what sources called a health care "Free Rider Penalty" on major companies operating in California. Three sources specifically named Walmart and Amazon as examples. Sources said the penalty would be similar to a fee the state of Massachusetts charges under its Employee Medical Assistance Contribution. In that state, employers pay a penalty based on employee wages and that fee helps fund the state's health insurance programs. Multiple sources who were not authorized to speak publicly about budget negotiations between the Senate and Assembly said this idea was gaining the most traction among Democrats in both houses as of Friday. While some are hoping to include this in the legislature's spending plan that's due June 15, sources said it's more likely a proposal that would be pushed later this year. "Whatever it takes to get more money," said Rob Lapsley sarcastically, the president of the California Business Roundtable. The organization lobbies for the state's largest companies. Lapsley said this proposal is just the beginning of what he expects to be a series of efforts to raise taxes from a state legislature that he says is too hesitant to stop spending. "People are frustrated throughout this state because of the cost of living," Lapsley said in an interview with KCRA 3. "The cost of living is directly attributable to the policy decisions this legislature is making.""If business pays more, people are going to pay more," Lapsley warned, while noting businesses are also trying to grapple with the uncertainty of President Trump's tariffs. "All this is going to do is raise our cost of living."Newsom, over the years, has repeatedly promised not to raise taxes. The governor's office did not comment on this story as of Friday afternoon. Lapsley is hopeful the governor will stick with that position. "I believe he's committed to that, he is serious about that, and we stand with him on that," Lapsley said. The Democratic Legislative Latino Caucus earlier this spring said new taxes could be on the table to help with the state's MediCal program. "Year after year, after year, after entities and businesses are getting away with providing a less than livable wage, are getting away with forcing them into our state's driven Medi-Cal program," said State Sen. Caroline Menjivar at the news conference in May. See more coverage of top California stories here | Download our app | Subscribe to our morning newsletter | Find us on YouTube here and subscribe to our channel
SACRAMENTO, Calif. —
California Democratic lawmakers are in talks to push a proposed new tax on major corporations such as Amazon and Walmart to help with the state's health care expenses.
Multiple sources in the Assembly and Senate confirmed to KCRA 3 Democrats have been discussing this along with a variety of other tax hikes as lawmakers work to figure out how to close a budget gap of at least $12 billion this year, and expected shortfalls in the billions in the years ahead.
A major contributor to the state's deficit this year has been the overflowing costs to the state's Medicaid system, known as MediCal. Lawmakers and Gov. Gavin Newsom recently expanded the program to provide health insurance to low-income undocumented people, which ended up costing billions more than expected and was partially to blame for the governor's back-to-back loan requests to cover some of the costs. The state this year is expected to spend about $11 billion on the program, according to state budget documents.
The governor is now proposing new limits on the health coverage for undocumented people and some Democratic state lawmakers have been pushing back. That pushback may materialize into a new proposed penalty or tax for major corporations that don't provide health insurance to their lowest-paid employees.
The proposal would impose what sources called a health care "Free Rider Penalty" on major companies operating in California. Three sources specifically named Walmart and Amazon as examples. Sources said the penalty would be similar to a fee the state of Massachusetts charges under its Employee Medical Assistance Contribution. In that state, employers pay a penalty based on employee wages and that fee helps fund the state's health insurance programs.
Multiple sources who were not authorized to speak publicly about budget negotiations between the Senate and Assembly said this idea was gaining the most traction among Democrats in both houses as of Friday. While some are hoping to include this in the legislature's spending plan that's due June 15, sources said it's more likely a proposal that would be pushed later this year.
"Whatever it takes to get more money," said Rob Lapsley sarcastically, the president of the California Business Roundtable. The organization lobbies for the state's largest companies.
Lapsley said this proposal is just the beginning of what he expects to be a series of efforts to raise taxes from a state legislature that he says is too hesitant to stop spending.
"People are frustrated throughout this state because of the cost of living," Lapsley said in an interview with KCRA 3. "The cost of living is directly attributable to the policy decisions this legislature is making."
"If business pays more, people are going to pay more," Lapsley warned, while noting businesses are also trying to grapple with the uncertainty of President Trump's tariffs. "All this is going to do is raise our cost of living."
Newsom, over the years, has repeatedly promised not to raise taxes. The governor's office did not comment on this story as of Friday afternoon. Lapsley is hopeful the governor will stick with that position.
"I believe he's committed to that, he is serious about that, and we stand with him on that," Lapsley said.
The Democratic Legislative Latino Caucus earlier this spring said new taxes could be on the table to help with the state's MediCal program.
"Year after year, after year, after entities and businesses are getting away with providing a less than livable wage, are getting away with forcing them into our state's driven Medi-Cal program," said State Sen. Caroline Menjivar at the news conference in May.
See more coverage of top California stories here | Download our app | Subscribe to our morning newsletter | Find us on YouTube here and subscribe to our channel
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