COVID-19's Impact on the California Legislature

The COVID-19 pandemic is having a major impact at the State Capitol, resulting in an environment where it is definitely not “business as usual.” The California Legislature and Governor Gavin Newsom are offering policy proposals that, while designed to help with the COVID-19 response, they may have negative repercussions for the business community.

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California Legislative Session Resumes
The California legislative session resumed earlier this month after an extended break due to the COVID-19 pandemic. The Assembly and Senate will be operating on a new expedited calendar to get bills through the legislative process. Legislators have been asked by the Assembly Speaker and Senate Pro-Tem to limit their bills to only those that are high priorities and relate to COVID-19 response, housing and wildfire response and prevention. However, despite these leadership directives, there are several bills that have been set for hearing in policy committees that are not directly related to COVID-19, housing or wildfires.  CLFP is opposing several bills that would negatively impact the food processing industry, including employer mandates, energy rate cost drivers and environmental mandates. Given COVID-19 safety concerns, access to the Capitol has been severely limited and participation in hearings will be through remote web access and phone in comments.

Governor’s Workers' Compensation Order
Governor Gavin Newsom signed an executive order establishing a rebuttable presumption that any COVID-19 related illness of an employee who worked outside the home, not just those who are essential workers, was the result of employment for workers’ compensation purposes if certain requirements are met. The presumption dates back to March 19, 2020, and will continue for 60 days from the date of the order (May 6, 2020). In announcing his signing of the executive order at his COVID-19 briefing on May 6, the Governor said that as the state moves into the next phase of recovery from the COVID-19 crisis, he wanted people to be confident that benefits would be available to them after other benefits are exhausted. The concern is that the order covers any employee working outside the home. As the economy begins to open up, more workers will be working outside the home, thereby increasing the number of employees to whom this order applies. Notably, as the economy reopens, it also increases the likelihood of contracting the virus in the community, not at work.

California Budget Deficit
The Department of Finance is projecting a $54.3 billion deficit — a landmark shortfall due to the COVID-19 crisis that will impact the state budgets for years to come. The forecast will be reflected in Governor Newsom’s “May Revise” budget scheduled to come out the week of May 11. Revenue projections are dire: a $9.7 billion drop for this year’s budget, and a $32.2 billion projected decline for the 2020-21 fiscal year.  Before the pandemic, California began the year with a $5.6 billion surplus and a projected $21 billion in its “rainy day” fund, reserves that will be wiped-out by the current deficit. The 2020 forecast for total wages and salaries is projecting a decline four-times greater than during the Great Recession, and the state anticipates a decline in personal income tax by 25%. The Department of Finance report suggests that federal stimulus money will be necessary for this budget crisis. Without federal help, budget experts say California will need to consider major cuts to areas such as K-12 schools and funding for county governments, which rely heavily on state dollars for health programs. 

Written by CLFP Government Affairs Director Trudi Hughes.