Lawmakers ask about how governor is spending emergency funds

SACRAMENTO — Lawmakers called for more details on how Gov. Gavin Newsom has been spending money during the state’s coronavirus response at a hearing at the Capitol on Monday.

One GOP lawmaker suggested the administration improperly used some state funds, setting the stage for potential litigation.

The convening of the Sub 6 Budget Process Oversight and Program Evaluation was the Assembly’s first official hearing since it went on a pandemic-related recess in mid-March. It’s nine members met in a large hearing room that normally seats 31 legislators. This allowed the Assembly members, many wearing masks, to stay several feet apart.

The hearing took place amid a maelstrom of other virus news. Much of this was about the state’s worsening budget situation and a pair of cases over prisoner releases aimed at fighting the virus among inmates.

Legislators’ questions about Newsom’s spending — mainly from Republicans — focused on two key areas. First, whether the governor violated the terms of SB 89. Rushed through into law over two days in March, and containing just 760 words, it appropriated up to $1 billion from the state’s General Fund to fight the virus and it’s economic impact. Other lawmakers appeared more concerned with Newsom’s $1 billion deal to buy protective masks from the Chinese company BYD Co. Ltd.

Assemblyman Jay Obernolte, R-Hesperia, told administration officials the bill was never intended to be a blank check for whatever priorities Newsom chose.

“When we adjourned six weeks ago, we placed extraordinary trust in the governor when we passed SB 89 and delegated to him a billion dollars of spending authority,” Obernolte said.

Obernolte went on to note the bill requires Newsom’s Department of Finance to send any spending requests to the Joint Legislative Budget Committee 72 hours ahead of time. The legislator said he has approved most of the requests the administration has made, such as spending on field hospitals and medical protective gear.

Even spending on some peripheral areas like homelessness appear to be warranted, Obernolte continued, given homeless populations can serve as a vector for spreading the virus. But some spending appears to be out of bounds, he said.

“He spent money on shoring up our social safety network,” Obernolte said. “Though that might be desirable, though that might be wise ... that is not something I feel we delegated authority to him for under SB 89.”

Obernolte then read from the bill, which authorizes spending on “any item for any purpose related to the March 4, 2020 proclamation of a state of emergency upon order of the director of finance.”

“My question for the Department of Finance is, ‘How is spending on social safety net programs related to that proclamation?’” Obernolte said. “That’s not something I feel was given to him in the authority in SB 89.”

This led to a somewhat testy exchange with Vivek Viswanathan, chief deputy budget director with the Department of Finance. Viswanathan described how the spending is “also about minimizing the short-term impact for the most vulnerable.”

Obernolte shot back that his question was strictly about whether Newsom had the authority to spend money this way. Viswanathan replied the administration viewed such spending as “directly relevant” to the emergency order.

Assemblyman Vince Fong, D-Bakersfield, pressed administration officials on discrepancies in “what is ordered and what is received” by local public health officials from state health and safety supplies.

Fong and other legislators also repeated demands that Newsom share the terms of the agreement with the Chinese company to supply masks.

Marko Mijic, acting director of the Office of Statewide Health Planning and Development, replied by describing the competitive market to acquire protective gear. He said making the contract publicly available right now could jeopardize the terms of the deal, but said it would be made public at a later date.

A growing list of indicators suggest lawmakers are right to be worried about the state budget. A new Public Policy Institute of California paper released Monday added to the growing mountains of evidence that the state’s hard-won rainy day fund would soon be spent as the state deals with rising costs and cratering tax revenues.

It warned the state’s hard-won $17.9 billion budget reserve “is large enough to withstand a mild recession such as the dot-com bust in the early 2000s” but not “a long and/or severe recession.” Perhaps with such concerns in mind, several dozen protesters gathered outside the Capitol on Monday to urge Newsom to drop his stay-at-home orders so they could go back to work

Meanwhile, attorneys were scheduled to appear about 80 miles away in federal court in Oakland for a status conference in Plata v. Newsom, 4:01-cv-01351-JST (N.D. Cal., filed April 5, 2001). Last week, U.S. District Judge Jon S. Tigar declined to order further prisoner releases beyond the approximately 3,400 already carried out, saying the prisons department had not violated inmates’ constitutional rights at this point.

In a separate, even longer-running case involving prisoner rights, this one about mental health care, a federal judge vacated a hearing set for Tuesday. Over the weekend, Chief U.S. Judge Kimberly J. Mueller of the Eastern District of California moved the hearing to May 19 and ordered the plaintiffs to submit further discovery requests relating to the agency’s current actions. Coleman v. Newsom, 2:90-cv-00520-KJM-DB (E.D. Cal., filed April 23, 1990).

The prisons department announced the first inmate death on Sunday. The prisoner from the California Institute for Men “passed away at an outside area hospital from what appears to be complications related to COVID-19,” according to a press release. A separate Sunday press released stated 115 prisoners and 89 staff have tested positive for the virus.