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California lawmakers balk at Gov. Newsom $2.9 billion spending request

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SACRAMENTO — California lawmakers are balking at a request from Gov. Gavin Newsom to let him spend another $2.9 billion on coronavirus-related expenses with little oversight.

They have already given Newsom $1 billion to spend on the crisis as he sees fit, money he has used to buy hotels and bankrupt hospitals to boost the state's capacity to care for the homeless and to treat a surge of coronavirus patients that, so far, hasn't happened..

But the Newsom administration also OK'd several high price deals for masks and other personal protective gear from dubious sources — deals that were eventually canceled or partially refunded when the equipment never materialized. The state eventually got the money back, but the process has concerned lawmakers who have urged Newsom to be more transparent in his spending decisions.

As state lawmakers kicked off public hearings Monday examining the Democratic governor's proposal, legislative budget writers said they were concerned with the new request. Their comments set up one of many potential fights as lawmakers rush to approve a budget that must cover an estimated $54.3 billion deficit. They have to do it by June 15. If they don't, lawmakers won't get paid.

“I think the Legislature is concerned. I don’t think that’s overstating it,” said Assemblyman Phil Ting, a Democrat from San Francisco and chair of the Assembly Budget Committee. “I think we have to ensure proper checks and balances and that there is proper oversight.”

Newsom says ithe money is needed should there be a “second wave” of coronavirus cases that suddenly swamps the state's hospitals. If that happens, the administration would have to act quickly with no time to wait for the Legislature's approval.

“This is a once in a century emergency, and nobody really knows how it is going to go,” said Vivek Viswanathan, chief deputy director for budget at the California Department of Finance. “The reason we have it in there is so we can act reflexively should conditions change.”

But state Sen. Holly Mitchell, a Democrat from Los Angeles, said the Legislature can act quickly, too. She said lawmakers approved the earlier spending in part because they suspended the legislative session in March to comply with the state's physical distancing requirements. Lawmakers returned to work earlier this month.

“It’s very important that the administration find a way to balance our ability to respond timely with acknowledging the role the Legislature must play,” said Mitchell, who is chair of the committee that writes the Senate's version of the state budget.

Last week, Newsom updated a spending plan that includes billions of dollars in cuts to public schools and public assistance programs to help cover the deficit caused by the economic fallout from the state’s mandatory stay-at-home order.

The proposal includes $8.6 billion in coronavirus-related spending, including Newsom's request for $2.9 billion “for any purpose related to the COVID-19 state of emergency,” according to an analysis by the nonpartisan Legislative Analyst’s Office. The only requirement would be for Newsom to give lawmakers 72-hours notice.

Newsom expects the federal government will eventually reimburse 75% of that money.

The state's projected deficit is driven by a dramatic drop in state revenues as 4.7 million Californians have filed for unemployment benefits. But it's also driven by an expected surge of enrollment in government-funded programs to help with health care, food and living expenses.

Newsom predicts the state's Medicaid enrollment will increase by 9.2% while enrollment in the state's food assistance program will increase by over 50%. The largest projected increase is an unprecedented 75.6% jump in the state program that offers cash assistance for low-income families with children.

Newsom's proposed budget cuts, about $15 billion according to the Legislative Analyst's Office, would automatically disappear if Congress approves another round of aid for state and local governments.

Democratic Assemblyman Kevin McCarty said Monday the chance of getting more federal money is "not very promising” and that lawmakers should consider asking voters for permission to borrow money to cover the shortfall.

“I think we need to really think about what is our plan B for California,” he said.

Republican Assemblyman Jay Obernolte, vice chair of the Assembly Budget Committee, said lawmakers have “an obligation to be the adults in the room.”

“We're going to have to decide where that trade off is on the one hand needing to deal with this crisis and on the other hand wanting to avoid the most painful of the cuts,” he said.

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Associated Press writer Cuneyt Dil contributed.

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