Tree lovers vs. Capitol Annex + Deficit won’t be ‘a one-time situation’ + Parental leave

Hannah Wiley, Andrew Sheeler
·7 min read

Happy Monday morning, California. We hope you were able to get outside for some fresh air this weekend. It’s going to be a wild week, with the May revise scheduled for Thursday.

WHO’S COUNTING?

Before the recession, California lawmakers launched a $755 million makeover for the Capitol that would bring down the warren of offices attached to the historic building and replace it with a modern structure.

Add in a related construction project meant to give lawmakers temporary offices on O Street and the total endeavor was expected to cost about $1.2 billion, making it the biggest undertaking in a boom-times set of plans former Gov. Jerry Brown approved to replace long-neglected state government buildings around Sacramento.

Now, with the state facing a deficit estimated to run north of $50 billion, a group of historic preservationists mostly worried about the potential destruction of trees in Capitol Park is asking the state to halt the project. Its members argue the red ink brought by the economic standstill is an opportunity to rethink an expensive project.

“We are not a group looking to kill the project,” said Dick Cowan, one of the leaders of the group called Public Accountability for Our Capitol. “We want it redesigned and we think we do need a pause. And that coincides nicely with a year where we’re going to scramble to pay for all of this.”

So far, lawmakers are not willing to consider the request, although it underscores the difficult decisions they’ll face in the coming months as they try to close the projected deficit.

Last year, the Legislature approved $3.5 billion for a year of spending on 200 capital projects, according to an October report from the Legislative Analyst’s Office. About $1.5 billion of that sum was expected to come out of the state general fund, which pays for education, prisons and social services, among other government programs.

Assemblyman Ken Cooley, D-Rancho Cordova, over years advanced the intricate plan to replace the 68-year-old structure known as the Capitol Annex.

The existing building has long been considered a health and safety hazard. A 2017 report painted a grim picture of a decrepit building lacking properly working toilets, insufficient exits and fire sprinklers.

Cooley insists the Capitol project is not one that will be delayed or suspended in the coronavirus-induced downturn.

“Maintenance of the current building’s antiquated and failing systems are costly, difficult to repair, and fail to provide the public with a safe and accessible venue to engage with their government,” Cooley said in an emailed statement. “The annex project has emerged from consideration of these perils by three administrations and, as it puts dollars into the regional economy, it will specifically address these vital health, life safety, accessibility and security deficiencies.”

Read more on why Cooley says the project is safe and what’s causing the preservationists to worry in our story today.

WHAT THE LAO SAYS

The coronavirus-induced recession will starve California’s budget for years, the state Legislative Analyst’s Office announced Friday, potentially suppressing state revenue by $126 billion through 2024.

The LAO projects a shortfall of $18 to $31 billion for the 2020-2021 budget. On the surface, that looks more optimistic than the $54 billion black hole Gov. Gavin Newsom’s administration projected in a memo Thursday.

But they’re not that as far apart as they look. The LAO and Newsom’s office each project similar worst-case revenue declines in the range of $40 billion for the next budget year.

The report said the numbers look different because the Newsom administration projected greater spending on social services, the administration included as-yet funded programs the governor proposed in January whereas the analyst did not consider those expenses and the offices used different assumptions regarding education funding.

“In effect, the administration’s estimates largely reflect gross changes gross changes in the budget’s bottom line while our estimate includes the net effects of current law,” the report said.

Both models anticipate years of a ballooning deficits, revenue declines and devastating unemployment rates.

Other numbers:

  • The LAO estimates the state’s revenues will fall by $26 to $39 billion in 2020-2021, compared to the administration’s $41 billion projection.

  • A “U-shaped” recovery, in which California’s economy bounces back quickly once the stay-at-home order is lifted and businesses can reopen, is likely to a suppress state revenue by $64 billion through 2024.

  • A longer recovery through an “L-shaped” model would carve $126 billion in shortfalls.

  • The Department of Finance expects in dire circumstances an 18 perent unemployment rate. The LAO’s unemployment analysis, at its peak, could land between 9.5 and 11.5 percent.

The startling predictions arrive just 90 days after Newsom unveiled a $222 billion budget proposal that included expanding assistance for the homeless and health care for undocumented seniors. Newsom’s January blueprint projected a $5.6 billion budget surplus.

Legislative Analyst Gabe Petek said the pandemic spawned a unique recession, and one that requires the Legislature to consider “all the tools in its tool box,” i.e. use reserves, reduce expenditures, increase revenues and shift costs.

“This is not going to be a one-time situation,” Petek said. “It’s not like this is a shock to the economy, shock to the budget, and then things go back to normal.”

His advice to the Legislature: don’t cut programs that will exacerbate the public health crisis and avoid a baseline budget. Instead, he said, the Legislature should dive right in to California’s fiscal problems.

Assembly Budget Chairman Phil Ting, D-San Francisco, said in a statement that the Legislature already knew the budget outlook would be “staggering.” Though he warned of “tough choices ahead,” he also echoed optimism by many that the state’s dedication to building the Rainy Day fund will soften the blow.

“As we begin work on a new budget, the LAO’s analysis is no surprise,” Ting said. “While there are slight differences with the Department of Finance over the size of the deficit, either way you slice it, we have a significant shortfall to bridge over the next few weeks. All options will be on the table.”

EXPANDED PROTECTED LEAVE FOR PARENTS

Democrat Sen. Hannah-Beth Jackson of Santa Barbara has introduced a bill intended to expand job protected leave for working parents affected by school and childcare center closures due to federal, state or local emergencies.

Senate Bill 1383 would allow all of California’s working parents the ability to take more than 40 hours of unpaid, job protected leave during emergencies; current law limits job-protected leave to companies with 25 or more employees and is limited to 40 hours.

“Working parents throughout the state are facing the unique challenge of balancing childcare, distance learning and work responsibilities amid the COVID-19 school closures. Without adequate job-protected leave, too many parents are forced to choose between caring for their children and keeping their job,” Jackson said in a statement. “We need to learn from this health crisis to be better prepared when the next emergency strikes, whether that is a catastrophic wildfire, earthquake or public health emergency.”

California’s COVID-19 related school closures have affected 6.2 million students and their families.

QUOTE OF THE DAY

“CA is now a vote by mail state. Every registered voter will receive a mail-in ballot for the Nov election. We’ll also provide safe in-person voting options. The right to vote is foundational to our democracy. No one should be forced to risk their health to exercise that right.”

- Gov. Gavin Newsom, via Twitter.

Best of The Bee: