Assembly Holds Informational Hearing on COVID-19 Economic Recovery

On Monday, the Assembly Budget Subcommittee No. 6 on Budget Process, Oversight, and Program Evaluation held its second COVID-19-related hearing to explore recovery efforts and economic stimulus activities. In beginning the hearing, Subcommittee Chair Assembly Member Phil Ting discussed the ongoing and anticipated fiscal implications of COVID-19, including that the state is unable to deficit spend which limits the state’s capacity to provide economic stimulus similar to that of recent federal economic stimulus actions. Ting further framed the hearing as an opportunity for experts to weigh in on the Legislature’s task in forming a state budget that benefits as many residents and businesses as possible.

Monday’s hearing consisted of one panel of witnesses participating via videoconference and featured economic, business, and labor experts, as well as representatives from the Legislative Analyst’s Office (LAO), Department of Finance (DOF), California Office of Emergency Services (Cal OES), and the California Health and Human Services Agency (CHHS). Panelists discussed the impacts of COVID-19 on business and employment activities, including technology needs, supports for low-wage workers, and regulatory burdens, among other topics.

Notably, Economist Jerry Nickelsburg from the UCLA Anderson Forecast anticipates the state’s unemployment rate will reach 16.5 percent by the end of the year based on the assumption that the economy will return to a pre-COVID-19 status. The economy recovery is anticipated to be quicker than that of the 2009 Great Recession, but disproportionate impacts are expected on retail and tourism industries, as well as low-income service workers. Nickelsburg further anticipates California’s recovery to 2019 employment levels will take approximately 18 months.

Subcommittee members queried panelists and Administration officials over unemployment insurance claim processing, small business relief, allocation of federal funds throughout the state, potential regulatory reductions, modifications in businesses and workplaces to support physical distancing, personal protective equipment (PPE) for employees, and other economic investments and fiscal interventions to spur economic activity and drive down unemployment. Several subcommittee members also expressed comments related to the need to invest significant resources in public health services and health care workforce throughout the state.

Assembly Member Jim Wood raised a series of questions related to the procurement of PPE among businesses to ensure workers and consumers are able to remain safe when businesses begin to open. Wood additionally pressed the Administration on a plan for distribution of PPE, particularly masks received as part of the Administration’s $990 million contract for such equipment.

In closing the hearing, Assembly Member Ting discussed the difficult road ahead for the Legislature and state in managing the fiscal crisis caused by COVID-19. Monday’s full hearing agenda is available here and a video recording of the hearing is available here.