HEALTH SCARE: California hospital lobbyists have painted a grim picture of their industry in recent months. In banner ads and interviews with anyone who will listen, the California Hospital Association has warned that many of its members are on the brink of death — the product of increasing costs for labor and supplies, and chronic underfunding by government payers for service to people with low incomes or disabilities or to the elderly. The problems worsened, hospitals say, when inflation and the pandemic drove costs up even higher.

CHA and its allies have asked for $1.5 billion for hospitals that see a lot of patients on public insurance, and to ultimately get the state to pay more for their care.

The association says 20 percent of hospitals in the state are on the brink of closure and half are operating in the red. Others are cutting services and laying off staff.

The full picture is mixed — with some hospitals doing quite well and others truly suffering — but there’s a reason this issue resonates with many in the Legislature.

For lawmakers, hospitals represent a difficult political calculation. They won’t score points going to bat for big corporations like Sutter or Kaiser Permanente. But on a retail politics level, local hospitals are hugely important in their districts, often the only big employer or place to get care.

No lawmaker wants to be like state Sen. Ana Caballero, who represents Madera and has been getting an earful from constituents who must travel out of county for treatment, sometimes with fatal consequences.

The CHA has spent big to make sure the world knows about the troubles in the industry. It shelled out nearly $935,000 on lobbying just in the first quarter of 2023.

“It’s a unique and dangerous time,” said Carmela Coyle, president and CEO of the hospital association, in an interview last week. “It’s far less expensive to keep a hospital operating than to bring it back after closure.”

While it’s true that the pandemic did a number on hospital revenues in 2022, that came after several years of huge profits for entities that generally don’t pay any taxes. There was a “sudden and sharp decline” to $207 million in net income for hospitals in 2022, according to data released recently from the California Health Care Foundation. But hospital income was $5.2 billion in 2020 and $9.2 billion in 2021.

A small subset of hospitals are in deep financial peril, according to the report. The ones most in need had operating margins of negative-8 percent at the end of 2022.

Lawmakers and the hospital industry have blamed low government reimbursement rates for eating away at profits. But the report refutes that idea, pointing out that the state’s worst-off hospitals aren’t seeing any more publicly insured patients than the average hospital. The problem isn’t just that the rates are too low.

“It’s flying contrary to much of the narrative we’ve heard in the last year,” Assemblymember Joaquin Arambula said to the hospital association in a hearing today.

HAPPY TUESDAY AFTERNOON! Welcome to California Playbook PM, a POLITICO newsletter that serves as an afternoon temperature check of California politics and a look at what our policy reporters are watching. Got tips or suggestions? Shoot an email to [email protected] or send a shout on Twitter. DMs are open!

BY THE BOOK: California Democrats this afternoon passed legislation pushing back against conservative challenges to school curriculum, labeled as “book banning” by liberal critics. Assembly Bill 1078 from Assemblymember Corey Jackson would require the California Department of Education to issue guidance to school districts on reviewing instructional materials and handling conversations about race and gender.

The bill comes as red states including Florida have passed state laws and local policies restricting access to books over content related to race and gender that conservative challengers deem objectionable. Conservative-leaning parent groups have also challenged books in California school districts and are fighting the bill.

“It’s time for us to make sure that this movement does not take hold into our state,” Jackson said, calling such content challenges “dangerous” on the Assembly floor.

The legislation, though, is a shell of its former self. Before amendments, it would have required schools to get approval from the State Board of Education before removing books or papers from school libraries, and local agencies would’ve had to follow state guidelines for restricting instructional materials. But those mandates were axed in a committee earlier this month, as was a requirement that learning materials in schools include a “proportional and accurate representation of California’s diversity.”

RESIDENTIAL RED TAPE: Pro-housing advocates are pushing to ensure that a closely watched housing bill passes out of the Assembly before Friday’s House of Origin deadline. AB 1633 by San Francisco Democrat Phil Ting would strengthen the state’s Housing Accountability Act, which limits local governments’ ability to deny or shrink proposed housing developments. Advocates say it would also curb “inappropriate use” of the California Environmental Quality Act, a landmark state law that can be used to slow or derail development. Speaking in the Capitol today, Ting said his bill would give developers a way to advance a project that has stalled because of a failed CEQA review.

“Too often, we see that developers are stuck in purgatory. They’re not told what to do. Their hands are tied. And they really have no way to move the project forward,” Ting said. “We see, too often, that it just means the housing never gets built.”

The bill is one of several introduced this session with the aim of streamlining development in California. It’s also among the roughly 600 bills that must pass out of the chamber by Friday for a chance at becoming law this year. — Lara Korte

MONEY TRAIN: Public transit agencies around California and the nation have been warning of a looming “fiscal cliff” as post-pandemic ridership stays low and federal funding runs out. Some Democrats are hoping the state will ride to the rescue as they craft next year’s budget. It doesn’t look promising so far. Gov. Gavin Newsom left the California Transit Association’s request for more than $5 billion over five years out of his initial budget proposal and the May revision. Getting the money at this point seems unlikely as Newsom and legislators haggle over how to close a $31.5 billion deficit and address a whole host of other priorities. Still, Sen. Scott Wiener and others are making the case, telling reporters today that California should use excess highway funds or find some other creative ways to help transit. The fear is that without assistance, transit agencies will be forced to make additional service cuts, resulting in more declines in ridership and a downward spiral for public transportation. “If you want to undermine a city’s downtown recovery, you take away public transportation, and it will make everyone’s lives harder,” Wiener said. — Ramon Castaños

— “Charles Manson follower entitled to parole, court says — overruling Newsom,” by the San Francisco Chronicle’s Bob Egelko: A state appeals court overruled Gov. Gavin Newsom on Tuesday and said Leslie Van Houten, the youngest follower of cult leader Charles Manson, should be released on parole after more than 50 years in prison for taking part in two murders ordered by Manson. It is the first time a court has rejected a governor’s decision to deny parole to a Manson follower after the parole board recommended release.

— “In downtown L.A., Bass’ plan to clear encampments faces crime, addiction and resistance,” by the Los Angeles Times’ David Zahniser: Since she took office, Mayor Karen Bass’ Inside Safe initiative has moved more than 1,200 homeless people off the street in Venice, North Hollywood, Del Rey, Beverly Grove and about a dozen other L.A. neighborhoods. In many cases, encampment residents went into the same motel or group of motels, leaving an area free of tents. Yet Bass’ initiative recently stalled in one part of downtown Los Angeles: the streets that surround the El Pueblo de Los Angeles Historic Monument, the city’s birthplace and home to Olvera Street and other attractions.

— “A tale of paradise, parking lots and my mother’s Berkeley backyard,” by The New York Times’ Daniel Duane: Plans to build apartments have sparked a fight between progressive newcomers and nostalgic old-timers — with surprising allegiances in a writer’s hometown.

— “Bob Lee killing: Nima Momeni’s lawyer drops him as a client,” by the San Francisco Chronicle’s Kevin Fagan and Annie Vainshtein.

— “State asked to stop diverting iconic Mono Lake’s water to Los Angeles,” by CalMatters’ Alastair Bland.

— “WGA blasts studio executive pay in message to Comcast, Netflix shareholders,” by the Los Angeles Times’ Anousha Sakoui and Wendy Lee.