Capitol Alert

The U.S. Court of Appeals for the 9th Circuit ruled today that California can cut rates to doctors, pharmacists and other providers for serving Medi-Cal patients, overturning a lower court decision that blocked a state budget cut from last year.

A three-judge appeals court panel determined that U.S. Health and Human Services Secretary Kathleen Sebelius has authority to determine whether California and other states can cut Medicaid rates -- the federal program of which Medi-Cal is part -- and still comply with the program's rules.

"The Medicaid program is a colossal undertaking, jointly funded by the federal government and the States," the 9th Circuit panel wrote. "Congress explicitly granted the Secretary authority to determine whether a State's Medicaid plan complies with federal law."

Sebelius approved California's cuts in October 2011, but U.S. District Court Judge Christina A. Snyder blocked them in December of last year. At the time, the cuts were expected to save $623 million annually.

California appealed the decision, and the 9th Circuit ruled in the state's favor today. It remains to be seen whether California will follow through with a 10 percent reduction to provider rates, and when that might occur.

Lynn S. Carman, who represents pharmacists as chief counsel for the Medicaid Defense Fund, said plaintiffs plan to ask the court for en banc review, meaning the full 9th Circuit bench would reconsider today's decision. If that is denied or the review does not block the rate cuts, Carman said his side would ask the U.S. Supreme Court to consider the case.

Though the prevalence of cigarette smoking among California high school students has declined over the past decade, smokeless tobacco use has risen among high school students, from 3.1 percent in 2004 to 3.9 percent in 2010, according a report released this morning.

The report, by Ron Chapman, state health officer and director of the California Department of Public Health, attributed the increase in part to a rise in the promotion and availability of snus and other smokeless tobacco products.

The study found the prevalence of smoking was higher at schools in neighborhoods with five or more stores that sell tobacco than at schools in neighborhoods without any stores selling tobacco.

The study also documented a rise in the illegal sale of tobacco to minors. According to the survey, 8.7 percent of retailers sold tobacco to minors this year, up from 5.6 percent in 2011.

"For the first time in the last three years, tobacco retailers are selling tobacco to our youth more often," Chapman said in a conference call with reporters this morning.

California's population grew last fiscal year by 256,000 residents due to natural births, a 0.68 percent increase that brings the state's total to 37,826,000 people.

The data are contained in a new release from the state Department of Finance, whose demographers update population statistics each year.

The state has seen annual population growth rates below 1 percent since 2004-2005. The new report shows California had 503,000 births last fiscal year, 234,000 deaths and a net migration of 13,000 people who left the state.

Placer County again topped the list in population growth with 1.21 percent growth to 360,680 residents. Santa Clara County was close behind with 1.20 percent growth to 1,828,597 residents.

Lassen County saw the biggest population decrease, losing 2.94 percent down to 33,650 residents. Finance spokesman H.D. Palmer said the county suffered significant population declines after the state began shifting lower-level prisoners and parolees to counties, resulting in fewer people at Lassen's California Correctional Center and High Desert State Prison.

Don't expect to hear much grumbling from former Gov. Arnold Schwarzenegger when his post-Proposition 30 tax bill arrives.

"I always tell my accountant, If you're in doubt about taxes, pay more," Schwarzenegger told Esquire magazine. "No Cayman Island offshore investments. No gimmicks. I love paying my taxes!"

In an interview covering everything from sex at 65 to proper tipping rates, the bodybuilder-turned-actor-turned-politician-turned-actor also bashed efforts to start a California Blueberry Commission during his time as the state's chief executive.

"I remember when I went into politics, the legislature wanted to create a blueberry commission. Who's gonna say no to a blueberry commission? Well, I said no. I thought they should fix the budget before they do the f***ing blueberry commission."

Dan says California may be an increasingly blue state, but the intramural battles have only just begun.

Have a question you'd like Dan to answer? Post it on our Facebook page.

See other Dan Walters Daily clips here.

VIDEO: Dan Walters says Democratic infighting has only begun.

The cost of gas, the cost of milk, the cost of everything seems to keep rising.

That includes currying favor with your favorite politician.

As it does every two years, the Fair Political Practices Commission will consider inflation-adjusted increases in campaign contribution limits at its meeting Thursday in San Diego. Maxing out toward the 2014 governor's race goes from $26,000 to $27,200 per election, while you can give $4,100 to each state lawmaker instead of $3,900.

The political watchdog agency also will consider a rule that requires more disclosure for campaign committees that spend more than $100,000 to circulate petitions in California. Under the change, such committees must disclose initiatives on their statement of organization.

Another change would require campaigns that distribute over 200 e-mails to disclose the candidate or committee's name on the missive. The FPPC says the change responds to a 2010 incident in which an attorney general candidate was attacked by an e-mailer claiming to be "the Hardy Boys" and "Nancy Drew."

California Democratic Party Chairman John Burton becomes an octogenarian Saturday. But what do you give a Democrat who's already received the gifts of a legislative supermajority, tax increases and a Daily Show appearance?

Perhaps a table at his big bash Thursday night at the Fairmont Hotel in San Francisco, where longtime Burton friend Willie L. Brown will preside as master of ceremonies. Prices range from $1,000 for an individual ticket to $50,000 for a top-tier table, with proceeds going to The John Burton Foundation to help homeless youth.

If you still have money left after the Burton party and maxing out to candidates, you might consider stashing more away for your kids' college fund. The state Scholarshare Investment Board, which oversees California's 529 tax-advantaged college savings plan, will consider raising account limits Thursday from $350,000 per beneficiary to $371,000.

Bill Ainsworth, a spokesman for the state Treasurer and Scholarshare Investment Board Chairman Bill Lockyer, said the board will consider "upping the max based on the increasing costs of tuition."