CAA Legislative Update

CAA Legislative Update
Edelstein Gilbert Robson & Smith

On March 19, California became the first state to issue a statewide shelter in place order.  The shelter in place order proved to be an effective tool to slow the spread of COVID-19.  In fact, California bent the curve so successfully that Governor Newsom confidently sent hundreds of ventilators to the east coast and began sharing masks with other states struggling to procure personal protective equipment.

While the Governor’s efforts bent the curve, they also resulted in economic trauma as businesses across the state were forced to close their doors and lay off employees.  In May, the state’s unemployment rate hit 16.3% and the impact on the state’s economy resulted in a massive $54 billion budget shortfall. 

Facing political pressure and outright defiance from some Counties, Governor Newsom laid out a phased plan to allow Counties to reopen businesses.  Over the next month and a half, the Governor modified guidelines and worked with Counties to allow a rapid reopening of the economy.

7,000 new cases of COVID-19 were reported Monday, and 6,000 more on Tuesday.  Hospitalization rates are up more than 50%.  Sacramento County is nearly out of ICU beds and Imperial County, a hot bed for new infections, is actively transferring new patients out of its overwhelmed healthcare system.  Public health experts warn that the higher rates of infection statewide are largely attributable to social gatherings among family and friends.  Nevertheless, the Governor has now directed 19 counties to close indoor operations at restaurants, wineries and tasting rooms, movie theaters, family entertainment centers, zoos and museums, and cardrooms.

It is difficult to predict exactly how the Governor and the Legislature will react to the resurgence of COVID-19.  However, there are a number of political concerns they must weigh.

Reopening vs. Closing

As noted above, the Governor has already acted to close many businesses that had just been allowed to reopen.  While he acknowledges that the increasing infection rate is being driven largely by social gatherings, taking a more conservative stance on reopening is not off the table as a means to alert Californians to the growing spread of the disease.

The Budget

California is reeling from one of the worst budget crises on record.  Closing the economy could exacerbate that crisis.  The recently enacted budget could add to those woes because it included fewer substantive cuts and left fewer reserves to reduce the impact of the recession in the next budget year.  The Legislature and the Governor are expected to revisit their recent budget agreement after the Legislature returns to session on July 13.

Legislative Priorities

While the Legislature committed to addressing “essential business” when it returned to session in early May, it has showed little discipline in taking bills off the table.  To date, the Legislature has showed a willingness to continue operating despite the pandemic.  Last week an Assembly staffer tested positive for COVID-19, and an Assemblymember self-quarantined after she was exposed to somebody infected with the virus.  While it seems unlikely, if infection continues to increase, the Legislature may have to revisit both its schedules and its priorities for 2020.