CSAC Bulletin Article

Governor Signs Early Action Budget Trailer Bill Creating the Distressed Hospital Loan Program

May 18, 2023

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.


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