Newsom expects $7B in virus spending
SACRAMENTO » California Gov. Gavin Newsom expects to spend up to $7 billion this year battling the coronavirus and the economic disruption it has unleashed as state budget experts warned lawmakers to prepare for revenue loss akin to the Great Recession.
Newsom has already authorized spending more than $2 billion on things like hotel rooms for the homeless, loans to small businesses and cash payments to adults living in the country illegally who are not eligible for federal stimulus benefits.
The virus’ spread in California has not been as devastating as public health officials had feared, with the growth in hospitalizations slowing as the state has been under a mandatory stay-at-home order for nearly a month that has closed schools and nonessential
businesses. But Newsom warned earlier this week that its steady presence would likely continue to disrupt public life well into the summer and beyond.
Unemployment data reflecting the coronavirus restrictions won’t be available until next month. But
Legislative Analyst Gabriel Petek said the number of people who have filed for unemployment benefits — more than 2.7 million as of Wednesday — indicate between 12% and 15% of Californians have lost their jobs.
“The pace of job losses that we are seeing, caused by an abrupt halting of economic activity, make it clear the economy has entered a recession, and possibly a quite severe one,” he said, adding that the Legislature should prepare for a “very substantial” decline in revenue.
The $7 billion Newsom plans to spend does not include other increased costs for things like Medicaid and other social safety net programs that have been affected by the virus. So far, the money Newsom has spent came from an emergency reserve fund and $1 billion the state Legislature gave to him just before they recessed on March 16.
Vivek Viswanathan, chief deputy director for budget at the California Department of Finance, said they expect the federal government to reimburse up to 75% of the state’s coronavirus spending because of President Donald Trump’s major disaster declaration.
“This is an unprecedented situation,” Viswanathan said.
It’s unclear how Newsom wants to spend this money. Viswanathan said the administration would have more details when it updates its budget proposal next month.
Viswanthan’s comments came as state lawmakers held their first oversight hearing on Thursday to examine how Newsom has been spending taxpayer money to address the crisis. Most lawmakers on the special budget subcommittee participated via video conference in a hearing that tested the technological limits of public debate in an era of social distancing.
Just two senators attended the hearing in person, held in a large committee room in the state Capitol. Senate Budget and Fiscal Review Committee chairwoman Holly Mitchell wore a mask and conducted the hearing with a package of disinfectant wipes at her side.
The hearing was delayed by nearly an hour because the Senate’s website crashed as more than 10,000 people beyond what state officials had expected tried to watch the hearing.
Thursday’s committee meeting is the first legislative hearing since lawmakers recessed on March 16 because of the coronavirus, believed to be the first unscheduled work stoppage at the Capitol in 158 years.
California has more than 27,600 confirmed cases and more than 950 deaths, according to data compiled by Johns Hopkins University.
For most people, the coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia, and death.
State Sen. Holly Mitchell, D-Los Angeles, chair of the Senate budget committee, gives a double thumbs-up after Sen. Nancy Skinner, D-Berkeley, joins by video an oversight hearing of the Senate budget special subcommittee on COVID-19at the Capitol in Sacramento on Thursday.