On Monday, the Governor signed
AB 112 (Chapter 6, Statutes of 2023), which creates the new
Distressed Hospital Loan Program to provide interest free
cashflow loans to not-for-profit and public hospitals in
significant financial distress, or to governmental entities
representing a closed hospital, and authorizes a General Fund
transfer of up to $150 million to support the program. The
Legislature took early action and unanimously passed AB 112 on
May 4, and approved four other budget-related bills (AB
100,
AB 110,
AB 111,
AB 113), which the Governor also signed on Monday.
Debate on AB 112 was robust on both floors of the Legislature,
with recognition of the urgency with which action in the
near-term on the issue of distressed hospitals is needed, but
acknowledgement that AB 112 is but a stop-gap measure for a much
larger issue that requires swift analysis and a longer-term
solution.
The Governor’s May Revision proposal released on May 12 includes
up to $150 million one-time General Fund in total over 2022-23
and 2023-24 for the Distressed Hospital Loan Program. According
to the Department of Finance, funding for this program is from
statewide General Fund savings at the May Revision and will not
require new spending above the Governor’s Budget.
