Setting his own conditions for opening up California’s economy, 52-year-old Gov. Gavin Newsom shows how little he learned from his predecessor 82-year-old former Gov. Jerry Brown. Brown watched his protégé, former chief of staff Gray Davis recalled Oct. 7, 2003 for wracking up a $60 billion budget deficit, largely to out-of-state electricity suppliers. But whatever happened to Davis in the wake of the 2000-2001 Dot-Com bubble and ensuing recession, it pales in comparison to what’s happening to the State with Newsom’s strict “shelter in place” orders. Newsom told California residents March 19 that 60% or 25.2 million residents would be infected with coronavirus in two months, announcing his “stay at home” order. California, with its 39.51 million residents, has 28,156 total cases of coronavirus, 552 new cases and 973 deaths or, looked at another way, only 4% of U.S. 685,541 cases.
When Trump announced his “back-to-work plan” April16, backed by the Centers for Disease Control [CDC], Food and Drug Administration [FDA] and National Institutes of Health [NIH], Newsom said California had its own criteria. Since Newsom declared March 19 his “shelter in place” order, he’s been getting faulty advice on the extent of California’s SARS CoV-2 or Covid-19 Californian per capital is one of the least hard hit states in the nationwide coronavirus pandemic. Demands for extra hospital beds, including the Navy hospital ship Mercy, have not been needed, despite Newsom’s pleas for extra hospital beds, ventilators and life-support gear from the federal government. Newsom’s proved he can’t prioritize the state’s needs, knowing that an exploding homeless population could get far worse if the state doesn’t go back to work soon, even with the SARS CoV-2 crisis.
Instead of setting his own conditions for returning the State back to work, Newsom should follow the very specific federal guidelines for opening up the State. Former Gov. Brown worked hard for his eight-year term to build up the States’s $21 billion Rainy Day Fund or surplus for emergencies like the coronvirus crisis. But Newsom just gave away $1 billion to fund uncocumented workers, something applauded by progressive groups but something he might regret if the state runs out of cash. “It’s been a really good 10-year run,” said Assembly Budget Chair Phil Ting (D-San Francisco). “What we didn’t anticipate, and obviously given the size of the pandemic, was how it doesn’t affect a piece of California, but every part of California, and everyone in the country,” Ting said. Ting’s worried that the States Rainy Day Fund could disappear quickly.
Public Policy Institute of California’s legislative analyst said the state has enough surplus to manage a mild recession without significant spending cuts. Newsome knows that the Covid-19 crisis is a catastrophic event to the California economy, largely because of Newsom’s strict “shelter in place” order. “Everything I worried about happening has just happened,” said State Sen. John Moorlach (R-Costa Mesa), worried about the State burning through the $21 billion Rainy Day Fund. “It’s beyond crazy how big this is,” said Sen. Majority Leader Bob Hertzberg (D-Van Nuys.) Hertzberg recall well what happened when the state ran a $60 billion deficit in the 2009 Financial Crisis. California’s budget is especially vulnerable to a loss of income tax revenue during periods of high unemployment. Over 2.5 million taxpayers filed for unemployment in the last month, something that could get a lot worse.
With California’s coronavirus problem defying Newsom’s predictions, showing a clear leveling off and drop off of cases, hospitalizations and deaths, Newsom should work feverishly on a return-to-work plan. “We don’t know what the future holds,” Ting said, worried that if the state remains shut down much longer the damage to the state treasury could be far worse than the 2000-2001 Dot-Com bubble or 2009-2010 Financial crisis. Ting fears “a budget where we were adding things and increasing spending on key priorities” to one that “we could have to cut back on these priorities,” including homelessness, education and health care. “Than God we did that,” Hertzberg said, referring Brown and former Gov. Arnold Schwarzenegger’s budgets that helped build the States’s $21 billion Rainy Day Fund. All that could be lost soon if Newsom doesn’t act quickly to reopen up the State.
With only 522 new cases and 22 deaths from coronavirus, it’s time for Newsom to comprehend the damage to state residents from prolonging his “shelter in place” order. Keeping California residents from working will bankrupt the state in short order, burning through the $21 billion surplus in record time. Because unemployment could remain at record levels for years, it doesn’t take a rocket scientist to figure out the State’s going to run out of money, forcing the Legislature to slash spending on priority programs like homelessness, education, health care and badly needed infrastructure. Before it’s too late, Newsom must pull the State back from the brink, letting workers return at the earliest possible time. If Newsom doesn’t act quickly, the State will have no money for homelessness, education, health care and infrastructure. Following federal guidelines is the best way to get California back to work.
