Western Governors Lobby Feds for $1 Trillion to Stanch Covid Losses

California Gov. Gavin Newsom during his daily coronavirus press briefing on Monday.

(CN) — A collection of lawmakers and governors from Western states told congressional leaders that their states, cities and counties will need $1 trillion in federal money to weather the economic downturn created by the coronavirus pandemic. 

In a letter sent to Senate leaders Mitch McConnell and Chuck Schumer, as well as House Speaker Nancy Pelosi and House Minority Leader Kevin McCarthy, leading legislators and the governors of California, Oregon, Washington state, Nevada and Colorado said the trillion-dollar infusion is necessary to prevent layoffs and preserve services and public safety. 

“Though even this amount will not replace the decline in revenue that we forecast, it will make a meaningful difference in our ability to make-up for Covid-19 revenue losses,” the letter states. “This aid would preserve core government services like public health, public safety, public education and help people get back to work.”

California Gavin Newsom said during his daily coronavirus press briefing Monday that California’s budget will likely experience such substantial shortfalls that even fundamental public safety services in the state could be curtailed. 

“It will directly impact public safety,” Newsom said. “It will directly impact our firefighters, police officers and first responders.”

The five states have collaborated on several issues, including the procurement of personal protective equipment and attempts to coordinate the public health response to make sure the western portion of the United States is aligned in the response to the Covid-19 pandemic. 

Newsom, in particular, has said the federal government will need to provide stimulus funds to states given the downturn since only the federal government can borrow against its own future because states are required to balance their annual budgets. 

“California has spent 13.4 billion on unemployment insurance since March 12,” Newsom said. “We spend 3.4 billion just last week.”

While the western states appear intent to pressure the federal government to provide more stimulus funds, GOP lawmakers in Washington do not appear to ready to move on further stimulus with any type of urgency. 

McConnell, the Senate majority leader, recently floated the idea of allowing states to declare bankruptcy, although he has since walked back the idea as it remains unclear if such a thing is even possible. 

President Donald Trump also said he was reluctant to reward states he viewed as fiscally irresponsible or states that have been uncooperative with the federal government over issues like immigration. 

“I think there’s a big difference with a state that lost money because of Covid and a state that’s been run very badly for 25 years,” the president said during a meeting with Florida Gov. Ron DeSantis, a Republican and one of Trump’s most vocal supporters.

California has often earned the ire of conservatives who say the state allocates too much of its money to overly generous pensions for public employees and that federal tax dollars should not be used to rescue states that committed fiscal errors. 

But California officials say the issue has nothing to do with pensions but is instead about how to best navigate an era during which they’ve been forced to shutter entire economies in the face of a rapidly spreading and particularly virulent disease. 

Also on Monday, state officials offered an explanation to lawmakers regarding how and why the state of California wired a half-billion dollars to an LLC that had been established only three days prior. 

“In the midst of this global crisis, there have been those who see it as an opportunity for exploitation,” said Assemblywoman Cottie Petrie-Norris, D-Laguna Beach.  

State Treasurer Fiona Ma said California wired $457 million to a company called Blue Flame Medical LLC, but that during the wire transfer the banks flagged the company for potential fraud by noting it was only three days old.

Ma explained that the purchase order came on March 26, 10 days after California instituted a stay-at-home order and in the midst of the worst of New York City’s outbreak. 

“The need to take immediate action, get immediate results impacted the normal deliberate checks and balances that were in place,” Ma said. 

There was also a separate disbursement of $8.7 million to a company that only sent hallf of an order of surgical masks. The state demanded and was granted a refund, Ma said. 

Ma said California has only allocated money for the equipment that has been received or scheduled to be received. 

Republican lawmakers signed a letter last week demanding more information about the contracts but were largely absent from Monday’s hearings aside from asking a few questions of Ma and other officials. 

“I think it is a success story, actually,” Ma said. “We have not lost any money.”

“It was the wild, wild west back then,” Newsom said during his Monday press briefing. “I hope we don’t develop collective amnesia about what went on back then.”

Newsom noted that in January, the state projected a $6 billion surplus. Now as the governor prepares to propose a revised budget for lawmakers to approve over the next two months, recent projections predict $54 billion in shortfalls. 

“We now are struggling with tens of billions of dollars in budget deficits, directly as an impact, directly caused because of the impact of this disease, Covid-19,” Newsom said. 

Cities and counties meanwhile face their own fiscal nightmares, as the shuttered economy means the taxes they rely on to maintain fire departments, police departments and other public safety workers has all but run dry for the time being. 

But there are signs of reopening.

Over the Mother’s Day weekend, hiking trails and some businesses in Los Angeles County reopened after county health officials relaxed stay-at-home orders last week. For the most part crowds were manageable, said County Public Health director Dr. Barbara Ferrer.

But 162 businesses received citations for not following strict guidelines. Under the current health order, customers are not allowed to shop in stores and everyone is required to wear face masks.

“We have to do our part to slow the spread of Covid-19,” said Ferrer. “Businesses should not open until they can adhere to all the protocols.”

She added, “This is our new normal and this will go on for a while.”

County health officials reported 39 new deaths and 591 new positive cases of Covid-19 in the last 24 hours. Ferrer said there is a general delay or slowdown in testing results from over the weekend that carries into the beginning of the week.

Ferrer said 20 health care workers have died since the Covid-19 pandemic began, mostly nurses. County health officials report 3,614 infected health care workers across LA County, with the majority infected who worked at nursing homes.

In total, 32,258 Angelenos have been infected with the novel coronavirus and the county’s death toll stands at 1,569. Half of all deaths in LA County took place in residential communal settings like jails, nursing homes and homeless shelters. Of the 779 deaths of residents at those settings, the majority were nursing home residents according to Ferrer.

Seven inmates incarcerated at the federal prison Terminal Island in LA County have died of the virus and more than 700 inmates and staff at the facility are infected, according to the Federal Bureau of Prisons. That includes 693 inmates and 15 staffers which began mass testing at the facility in San Pedro.

LA County Sheriff Alex Villanueva reported Monday that some inmates at one of his jails tried to intentionally to infect themselves. The North County Correctional Facility saw 21 additional infections because inmates thought they would be released, according to Villanueva.

The sheriff said a group of inmates sipped hot water from the same cup in a common area and passed around a mask to sniff. County health officials did not correlate Villanueva’s update with the increase of infections.

There are now 4,590 inmates in quarantine and over 300 are infected across the county’s jails.

Los Angeles County Sheriff Alex Villanueva said inmates at the North County Correctional Facility in Castaic Lake attempted to infect themselves with the novel coronavirus. (Courtesy of Los Angeles County Sheriff’s Department)
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