April 10, 2020 Edition

Legislature Extends Joint Recess Due to COVID-19

Late last Friday, Senate President pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon announced the Legislature has extended its joint recess to May 4, 2020, amid the ongoing COVID-19 pandemic. Recall, the Legislature recessed last month in an unprecedented move to mitigate the impacts of the COVID-19 crisis; the Legislature was previously scheduled to return to Sacramento on April 13.

Assembly Budget Committee Issues Memo Detailing Likely Budget Process Changes

On Monday, Assembly Budget Committee Chair Phil Ting issued a memo detailing likely changes in the state’s budget process in light of COVID-19 and its widespread impacts on the state. In the memo, Assembly Member Ting indicates the state’s revenues are expected to be significantly decreased and the full damage to the state’s economy will not be able to be assessed until at least August.

Upon the Legislature’s return to Sacramento, the budget process, which normally occurs over the course of several months, is expected to be condensed into a few short weeks. Ting discussed likely changes to the state budget process, including:

  • June 15 Baseline Budget: The Governor’s May Revision is expected to become a “workload” budget that reflects 2019-20, or current, service levels. The Budget Committee will no longer be able to consider new priorities or ideas from stakeholders, advocates, or lawmakers with the exception of COVID-19-related costs, wildfire prevention, and homelessness funding. It may be possible that existing state programs will need to be reduced during this time. Subcommittees will be directed to agendize only items that are necessary to build the baseline budget or items providing direct oversight of disaster response and recovery spending.
  • August Revision: Given the delay in personal income tax receipts to July 15, a complete revenue picture is not expected to be available until August. As such, the Budget Committee is expected to revisit the budget after June 15 with a second round of budget deliberations. This second round will allow the Legislature to consider issues that were not able to be addressed in May and June, especially new issues related to the recovery of the COVID-19 pandemic. During this time, the State may need to consider sizable ongoing reductions to major programs. Subcommittees will not likely be able to revisit any proposals for new investments during this time.
  • Deferring 2020 Promises: Prior to COVID-19, the State was expecting an ongoing surplus that offered a chance to expand additional services to Californians. However, this prospect is likely no longer possible this fiscal year, and one or more difficult fiscal years ahead are expected. Despite these challenges, Ting indicated the State’s prudent decisions since the Great Recession will help us avoid any lingering structural budget problems that were experienced by the State prior to 2012.

Relatedly, in remarks to the media on Friday regarding the ongoing COVID-19 pandemic, Assembly Member Ting discussed how California has for years established its rainy day fund; however, Ting indicated the state will need to dip into this fund and reiterated the importance of ensuring “we’re spending the money wisely because that rainy day is looking more like a rainy season, and may stretch even longer.”

The full memo from the Assembly Budget Committee is available here.

DOF Notifies Legislature of $495m Down Payment for Masks, Legislature Wants Tracking Webpage

The Department of Finance (DOF) on Tuesdayissued a letter to Senate and Assembly Budget and Appropriations Committee chairs notifying the Legislature of the California Office of Emergency Services’ (Cal OES) intent to make an initial down payment of $495 million to secure a newly established supply chain of masks in response to the COVID-19 pandemic. The move by the Newsom Administration is expected to provide 200 million masks per month and total $990 million.

To make the initial $495 million down payment, the Department of Finance indicated it was cobbling together $188 million from the Legislature’s emergency funding appropriation made last month and $307 million from the state’s Disaster Response-Emergency Operations Account (DREOA). Recall, DOF notified the Legislature late last month of a $1.3 billion transfer to the DREOA to assist in COVID-19 response efforts.

The remaining $495 million for the masks is expected to be paid as deliveries are received by the state; DOF has not yet identified a funding source for the remaining payments. In its letter, DOF reiterated the continued need for PPE and masks by health care workers, caregivers, and other essential sector employees. To date, California has ordered approximately $1.4 billion in PPE. DOF contended this new supply chain will allow the state access to a dependable supply of PPE and allow the state’s procurement team to concentrate efforts on other critical supplies and equipment.

In response to DOF’s notification, Joint Legislative Budget Committee (JLBC) Chair Senator Holly Mitchell on Thursday penned a letter requesting that the Newsom Administration provide the JLBC with a series of details related to the mask expenditure, including the performance standards of the vendor and manufacturer, the price per mask, the quality standards the masks are required to meet, the production and delivery times, and the efficacy of technology to be utilized to decontaminate masks that will be reused. Furthermore, Senator Mitchell called on the Newsom Administration to provide details on how it plans to prioritize masks between different jurisdictions within the state and different categories of users (e.g. health care workers, first responders, grocery workers).

If masks and other PPE are to be allocated outside of California, Senator Mitchell requested the Newsom Administration detail to the JLBC how it was determined that such masks would not be needed by California, what out-of-state entities would receive masks and PPE items, the amount of masks each entity would receive, how it was determined that these entities should receive masks, and whether the state would be reimbursed for any masks provided to out-of-state entities. Mitchell also urged the Administration to secure assurances from FEMA that these supplies will remain in California and not be commandeered or seized by the federal government.

In light of the significant spending commitments made for PPE items and other medical equipment, Senator Mitchell requested that the Administration launch, no later than early next week, a regularly updated webpage that describes the state’s inventory of each major type of equipment and the destinations of each outgoing shipment, including quantities shipped by county, city, and categories of users including health facilities and other essential workers. Mitchell requested the webpage include the percentage of requested equipment that has been fulfilled by county or public health jurisdiction and any state or local guidance specifying a priority order for distribution within each jurisdiction.

Mitchell further noted the Legislature and JLBC recognizes the need to respond quickly to the ongoing COVID-19 pandemic and urged the Administration to act quickly to provide more information that tracks the supply and demand of PPE throughout the state. Ultimately, Mitchell concurred with the Newsom Administration’s spending request with the understanding that the Administration will provide the Legislature the information it has requested.

Newsom Administration to Spend $100m in COVID-19 Funds on Child Care for Essential Sector Workers

This afternoon, the Newsom Administration Department of Finance (DOF) sent two letters to Senate and Assembly Budget and Appropriations Committee Chairs notifying the Legislature of the Administration’s intent to provide $100 million in emergency funds approved by the Legislature last month to support child care providers and essential workers. $50 million is proposed to be made available to the California Department of Education (CDE) to allocate to existing state-subsidized child care providers for the support of additional access to early learning and care for essential workers and at-risk populations. These funds are expected to provide up to 20,000 limited-term additional state-subsidized child care slots.

An additional $50 million is proposed to be made available to CDE to provide non-local educational agency child care providers, which remained open or intend to reopen during the COVID-19 emergency, a flat-rate allocation based on capacity as reimbursement for the purchase of various PPE and cleaning supplies and/or labor related to cleaning.

Additional information is available from the Governor’s website here.

Senate, Assembly Form Separate COVID-19 Expenditure Oversight Committees

Senate President pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon on Thursday released a joint statement indicating they are organizing committee hearings prior to the Legislature’s return to Sacramento to increase oversight on how funds are being spent during the COVID-19 pandemic. In their statement, Atkins and Rendon noted, “We strongly believe the Governor and his team are working diligently on the behalf of Californians, but we promised the people of California we would provide this oversight when we passed emergency COVID-19 funding in March.”

Senate President pro Tempore Atkins announced the formation of the Senate Special Budget Subcommittee on COVID-19 Response to be led by Senate Budget & Fiscal Review Committee Chair Senator Holly Mitchell. Full membership of the subcommittee has not yet been made available. The bipartisan subcommittee will hold its first hearing on Thursday, April 16 at 2:00 pm and will include a review of the state’s COVID-19 spending, including spending authorized by the Legislature in March. The Department of Finance (DOF) and the Legislative Analyst’s Office (LAO) will also participate in the hearing.

On Friday, Assembly Speaker Rendon announced the formation of the Assembly’s COVID-19 budget oversight subcommittee. Its first hearing will be held on Monday, April 20 at 10:00 am. Few details regarding the subcommittee and its upcoming hearing were available at the time of this publication.

Given the need for continued social distancing, several members of each subcommittee will be expected to participate remotely. The public, including media, is also encouraged to watch the hearings online and submit public testimony prior to the hearings.

Newsom Issues Executive Orders on Price Gouging, Telehealth, Supply Procurement, Others

Amid the ongoing COVID-19 pandemic, Governor Gavin Newsom issued a series of executive orders within the past week. Below, these orders are detailed:

Telehealth Services

Governor Newsom issued Executive Order N-43-20 on Friday, April 3, relaxing specified state privacy and security laws for medical providers so they can provide telehealth services without the risk of being penalized. The action is consistent with the federal Health and Human Services (HHS) Office for Civil Rights waiver issued last month regarding federal privacy and security laws.

Price Gouging Protections

Also on Friday, April 3, Governor Newsom issued Executive Order N-44-20 prohibiting sellers of any kind from increasing prices on food, consumer goods, medical or emergency supplies, and certain other items by more than 10 percent. The order also provides additional tools to the California Department of Justice (DOJ) and Attorney General’s Office, among others, to take action against price gougers.

Childcare for Essential Workers

Executive Order N-45-20 was issued by Newsom on Saturday, April 4, and allows the California Department of Education (CDE) and California Department of Social Services (CDSS) to waive certain programmatic and administrative requirements in response to the COVID-19 pandemic. The waivers will focus on eligibility and enrollment priorities for essential workers, including health care professionals, emergency response personnel, law enforcement, and grocery workers. The order also allows the state to take advantage of new federal flexibility to provide pandemic Supplemental Nutrition Assistance Program (SNAP) benefits to children.

Medical Supply Procurement

Governor Newsom issued Executive Order N-46-20 on Tuesday suspending sales and use taxes for PPE items sold to or purchased by the State of California.

IHSS Waiver

Executive Order N-47-20 was also issued by Newsom on Tuesday and allows for a 60-day waiver for In-Home Supportive Services (IHSS) program caseworkers to continue their work caring for older adults and individuals with disabilities.

Upcoming Elections

Governor Newsom issued Executive Order N-48-20 on Thursday shifting three local special elections that are scheduled for May and June to all-mail ballot elections. Local election officials have the option to make in-person voting available, but only in a manner consistent with public health and safety. The three impacted elections are in the City of Santa Ana, the City of Commerce, and the El Rancho Unified School District.

LAO Publishes Reports on COVID-19 Issues

The Legislative Analyst’s Office (LAO) continues to issue several relevant reports related to COVID-19 and its impacts on California. Included among the recent reports:

  • Federal Health-Related Response: This report highlights key federal actions in response to COVID-19 related to public health broadly and individual health care services. The post examines recent actions by Congress, the declaration of a national emergency, increased Medicaid funding, and the passage of legislature that provides resources for public health, hospitals and health care providers, and private health insurance coverage. The report was recently updated to reflect the state’s intention to cover COVID-19 testing for uninsured individuals through Medi-Cal.
  • Disaster Declarations and Funding Implications: This report assesses federal activities in marshaling resources to support states in COVID-19 response efforts, as well as mitigating associated economic impacts to businesses, local communities, and individuals. The report was recently updated to reflect the enactment of the federal CARES Act (H.R. 748).
  • COVID-19 and the National Guard: This report discusses the assistance the federal government is providing to states through the National Guard.

Additional information and reports are available from the LAO here.