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SACRAMENTO, Calif. (AP) — Democrats in California have agreed to delay a minimum wage increase for about 426,000 health care workers to help balance the state's budget.
Health care workers would see their pay increase on Oct. 15 if state revenue between July and September is at least 3% higher than what state officials have estimated. If that doesn't happen, the minimum wage increase will not start until January.
The minimum wage for most people in California is $16 per hour.
Gov. Gavin Newsom signed two laws last year that increased the minimum wage for two groups: Fast food workers and health care employees.
But unlike the fast food minimum wage, the increase for health care workers impacts the state's budget. That's because California employs some health care workers and also pays for health benefits through its Medicaid program.
The Newsom administration had previously said the minimum wage increase would cost the state about $2 billion. But if delayed until January, the increase will cost the state's general fund about $600 million — a figure that would rise yearly to reflect scheduled increases until it reaches $25 per hour for most health care workers.
The agreement is part of a plan to close an estimated $46.8 billion deficit in the state's budget. Newsom and the Democrats who control the state Legislature have been negotiating on how to close the shortfall.
The agreement they announced Saturday includes $16 billion in budget cuts, including a $110 million cut to scholarships for prospective college students from middle-income families and $1.1 billion in cuts to various affordable housing programs.
The agreement would pull $5.1 billion from the state's savings account while delaying $3.1 billion in other spending and shifting $6 billion in expenses to other funds.
But Newsom and lawmakers agreed to abandon some previously proposed budget cuts, including one that would have stopped paying for people to care for some low-income disabled immigrants who are on Medicaid.
“This agreement sets the state on a path for long-term fiscal stability — addressing the current shortfall and strengthening budget resilience down the road,” Newsom said.
Senate President Pro Tempore Mike McGuire called it a “tough budget year,” but said elected officials were able “to shrink the shortfall, 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.”