SACRAMENTO, Calif. (CN) — Toting a $1 billion pandemic fund granted unanimously by lawmakers, California Governor Gavin Newsom has responded to the pandemic decisively and in a manner that has drawn praise both within the state and countrywide.
In just a month, Newsom has withdrawn nearly $770 million from the account to buy medical supplies, fund temporary housing for the homeless, provide a $75 million undocumented worker stimulus package and prop up struggling nursing homes.
The cash infusions have helped California “bend the curve,” but the actions have added up and Newsom is warning the state may need $6 billion more to fight the novel coronavirus.
After spending the last month on the sidelines, lawmakers on Thursday temporarily reopened the Capitol to demand details on the governor’s pandemic-induced spending spree and discuss the state’s dismal budget outlook.
“As the Legislature will soon be required to meet our constitutional deadline to pass a budget for the 2020-2021 fiscal year, it’s essential we have a comprehensive discussion,” said state Senator Holly Mitchell of convening the Senate Special Budget Subcommittee on Covid-19 Response.
Of the actions and deals Newsom has produced, it’s a mammoth agreement with a Chinese company for masks that has drawn the most skepticism from lawmakers.
Last week, Newsom announced on MSNBC he had secured a deal with BYD China for up to 200 million N95 and surgical masks per month. The figure not only shocked host Rachel Maddow, but lawmakers who were left in the dark on a plan that could ultimately cost taxpayers nearly $1 billion.
Over a week later, the contract still hasn’t been revealed to the Legislature – or the public – and Newsom’s administration said it will continue to bogart the details.
“When will the [budget committee] chair or any one of the legislators like myself see the contract?” asked state Senator John Moorlach, R-Costa Mesa.
Christina Curry, a director at the state’s Office of Emergency Services, signaled the contract was anything but concrete like the one the governor pitched to a national audience. She responded the deal was so large and details so fluid it should remain under wraps until the masks are actually en route to the Golden State.
“We do intend to provide that contract, but we have concerns about releasing too many details, because again our goal is to get the supply into California for the people who need it,” Curry said. “As you can imagine, with something that is such high demand and such high interest and at the volume we’re looking to get, there are a lot of things that can come into play to definitely disrupt that.”
Curry noted the deal was flexible depending on the state’s ongoing need and crafted to ensure it qualifies for reimbursement by the federal government.
But the explanation didn’t sit well with many on the budget committee, including its vice chair.
State Senator Jim Nielsen, R-Chico, said he didn’t have “much confidence” in the deal and wants reassurance the masks will be delivered in a timely manner.
“At the very least we can’t be throwing out a false hope to people,” Nielsen said. “There’s a lot of money involved in this too; so please do understand there’s not an expectation but a demand that the contract become available.”
State Senator Richard Pan, D-Sacramento, asked how the masks would be distributed across the state once received and whether Curry’s office could list where the supplies end up.
Once again, Curry shunned the lawmaker’s request for transparency with another blurred response. She said publicizing information about “highly desired medical supplies” could “open up issues with questioning decisions.”
Clearly unsatisfied, Pan reminded Curry the Legislature is a co-equal branch and asked Curry to at least share the information privately with lawmakers.
Mitchell and Nielsen were the only senators appearing in person and donned face masks along with the downsized committee staff. To achieve social distancing, the limited audience and press pool were separated and admitted into the hearing individually.
The hearing was delayed nearly an hour due to the crashing of the Senate’s website, but eventually proceeded with most of the committee members participating via Zoom call.
A pandemic is untimely by nature, but the current one comes during the peak of budget negotiations in the world’s fifth largest economy.
California in a matter of weeks has moved from the safety of a $17 billion surplus to the early throes of a recession analysts predict could exceed the Great Recession. With the state budget heavily reliant on income taxes, Newsom and the Legislature are attempting to piece together a spending bill at a time when filing deadlines have been extended.
As a result, Newsom has effectively scrapped his January proposal and is expected to reveal next month a vastly conservative “baseline” budget that won’t build on or exceed the current plan. Lawmakers are constitutionally required to approve a spending plan by June 15.
State Senator Bob Wieckowski helped craft state budgets during the state’s arduous recovery from the Great Recession, but he noted the current situation is already proving to be a more daunting task.
“It was a slow recovery but there was some way to gauge it,” said Wieckowski, D-Fremont. “I don’t know if we’ve ever seen anything like this.”
Legislative Analyst Gabriel Petek opened the hearing by claiming the recent spate of job losses has already pushed California into recession territory. In the last four weeks over 2.7 million Californians have filed for unemployment, meaning over one out of every 10 workers appears to have lost a job.
“The pace of job losses that we are seeing in recent weeks that have been caused by the abrupt halting of economic activity, make it clear that the economy has entered a recession and quite possibly a severe one,” Petek told the committee.
Petek said restaurants, bars and brick-and-mortar retail stores will be hardest hit due to the hallmarks of most recessions: Decreased consumer demand and increased household savings. He said the virus holds the keys and the worst case scenario would be a second wave shutting down society once again.
“The state has gone from an anticipated surplus and now likely facing a budget problem and potentially a significant one,” Petek said, noting the recession will impact the state’s coffers for several years.
The state has already dedicated over $1 billion to fighting the pandemic but Newsom’s administration has predicted the price tag could rise to $7 billion, nearly double the current budget of the entire judicial branch. In the end, the state hopes the federal government will reimburse up to 75% of its emergency pandemic spending.
“Our department, as well as other agencies across the executive branch, are really working hard to track the flow of federal funding and maximize the reimbursements we get for California,” said Vivek Viswanathan with the state Department of Finance.
A similar oversight hearing is scheduled in the Assembly next Monday.