California Capitol News

By Aaron Read & Associates, SCRHA's Lobbying Firm

We are in unprecedented times and Sacramento, like the rest of the country, and planet, are trying to find ways to conduct the people’s business in a manner that is safe and effective. The Legislature, after being closed for approximately five-weeks, returned and started hearing and voting on legislation. The Assembly returned May 5 and the Senate returned on May 11th.

It is far from business as usual, however. They are operating under strict social gathering guidelines, Legislators have reduced bill loads, and committees hearing days have been reduced. In the Assembly, each policy committee will hold one hearing day. The Senate policy committees will hold up to three, however, they will all be held within a three-week period. Since there is limited seating in hearing rooms, most testimony is being taken over the phone.

BUDGET

In less than two months, the COVID-19 pandemic has fundamentally changed the way we live and work. It has also, according to California's Department of Finance (DOF), plunged California into a deep recession and created, seemingly overnight, a projected $54.3 billion state budget deficit over the next 14 months.

In a Fiscal Update released yesterday, the DOF concludes that from the start of the crisis through the end of the next fiscal year on June 30, 2021, state tax revenues will drop by $41.2 billion, health and human services program costs will go up by $7.1 billion, and there will be increased budget expenditures, mostly related to responding to COVID-19, of $6 billion. You can read the complete Fiscal Update here.

Long gone is the balanced state budget the Governor unveiled in January. It projected a $5.6 billion surplus and had over $20 billion in rainy day and other reserve funds.

In recent days, the Administration has said that the rainy day reserves and the federal funding received so far will not be sufficient to cover lost state revenue and increased COVID-19 response costs. To date, the State has received (or will receive in the near future) just short of $20 billion in direct funding that can be used for programs or services that are currently being paid for out of the state budget. Last month, the Governor officially requested billions of dollars in additional federal assistance to cover increased COVID-19 related costs.

But any additional federal support is unlikely to arrive by May 14, the day the Administration will release its May Budget Revision for the 2020-21 state budget. Initially, the Administration had signaled that the May Budget Revision would propose a "workload" budget which would roll over the current year spending authority with minor adjustments where necessary. Today, with the release of the Fiscal Update, it becomes more likely that the Administration will need to propose budget cuts or adjustments next week to meet California's constitutional requirement that the Legislature adopt a balanced state budget by June 15.

This year, there will be two major budget proposals enacted. The first, the traditional June 15th budget will be a discussed above. With Tax Day now delayed until July 15th, the Governor and Legislature anticipate making an August Revision once the state has a complete picture of tax receipts after Tax Day. Lawmakers and the Governor will then work together to set spending priorities with more complete economic data.

LEGISLATION

In light of the COVID-19 job losses, legislation is being amended to address housing and homelessness issues facing California. This means legislation focused disallowing evictions during the state of emergency, reducing rent and establishing repayment schedules for those that could not afford to pay rent. On bill in particular is AB 828 (Ting).

AB 828 (Ting) specifically allows the following:

• Allow the courts to force landlords to reduce rents by 25% — even if a tenant does not show a COVID-19 hardship or need.
• Allow the courts to set rents and change rental agreements already in place.
• Protect nuisance tenants. The bill does not require tenants to answer an unlawful detainer complaint.
• Mandate that rental property owners demonstrate an economic hardship to collect the contracted rent.

The Southern California Rental Housing Association is opposed to the bill and it’s membership has been very active; calling, writing, and e-mailing Legislators voicing their opposition. As a result, several co-authors have asked to have their names removed from the bill and Senator Pat Bates, a strong supporter of SCRHA publicly opposed the bill sending out letters to her constituents voicing her opposition.

We will keep you apprised as committees and bills are heard and amended.