If you don't see images in this message, click "Display Images" or the equivalent.
Advertise in The Nooner to reach over 8,000 readers
The Nooner for Wednesday, May 6, 2020, presented by SYASL Partners
Happy humpday. For those unfamiliar, there used to be a median day of the work week. I don't want to get too partisan, but we all have to admit that the advance team who arranged GnR's version of "Live and Let Die" and the Stones's "You Can't Always Get What You Want" at President Trump's maskless visit to the Honeywell mask factory is guilty of malpractice. They forgot Billy Joel's "Only the Good Die Young."
If you're going to take the gallows humor route, you have to go all the way. In fairness, the song mix was the standard mixtape used at rallies.
It's National Nurses Day. I think we value them more than ever today and should never forget. The Chron has profiles and interviews of several of those on the front lines.
JOB LOSSES: Ahead of tomorrow's weekly unemployment rate release and Friday's report on the unemployment rate, payroll processor ADP is out with its report on private sector job losses and it is astounding.
Private sector employment decreased by 20,236,000 jobs from March to April according to the April ADP National Employment Report®. The report utilizes data through the 12th of the month. The NER uses the same time period the Bureau of Labor and Statistics uses for their survey. As such, the April NER does not reflect the full impact of COVID-19 on the overall employment situation.
Leisure and hospitality accounted for 42% of the losses, which would include restaurants, movie theaters, hotels, theme parks, and the like. In California in March, that was 10% of the state's nonfarm jobs. Trade/transportation/utilities accounted for another 17%, which would include the hard-hit airlines.
I need not tell you that since April 12th when the ADP and DOL reports ended, there have been many large announcements of furloughs or layoffs, including Disney, Airbnb, Uber, and others with headquarters in California.
As some retail reopens, many furloughed employees are going to face a dilemma -- with the federal $600/week supplement to state unemployment, going back to work may be a reduction in income, but not answering the call from the employer may mean termination.
POLL POSITION: Berkeley IGS is out with a new poll this morning on COVID-19:
The latest Berkeley IGS Poll reveals that the COVID-19 pandemic is having especially large effects on the safety and economic well-being of people of color in California. Racial minorities are significantly more likely to report having jobs that place them in regular contact with others and they are more concerned that their jobs place them at risk of contracting the disease.
While some political leaders have argued that the economic damage caused by the pandemic requires a quicker reopening, the IGS poll shows that Latino, Black, and Asian American respondents are actually just as, if not more, supportive of continuing shelter-in-place as are white Californians.
TOO FAST? The LAT's Rong-Gong Lin II reports that not everyone is on board with the governor's plan to begin a a phased-in approach of reopening.
Santa Clara County’s executive officer cautioned Tuesday against moving quickly to lift the shelter-in-place order.
The death toll in California is still going up at significant numbers, Dr. Jeffrey Smith told the Santa Clara County Board of Supervisors. A Times analysis showed that 495 coronavirus deaths were reported statewide in the seven-day period that ended Sunday. While the weekly death toll represented a 9% decrease compared to the previous week, it also represented nearly one-quarter of the state’s death toll up to that point.
“You can still see that it’s still gone up pretty significantly in recent times,” Smith said. “There’s a lot of talk in California about relaxing shelter-in-place [orders]. I just want to point out that we’re still, in California, going up dramatically. So there’s no clinical evidence that shelter-in-place [orders] should be relaxed at this point.”
Echoing statements by other medical experts, Smith said loosening the stay-at-home orders would result in more infections and deaths.
Dr. Jeffrey Smith is not just CEO of Santa Clara County, but has an M.D. from USC and a J.D. from Berkeley. Did I mention that he's also a former Contra Costa County supe and Martinez councilmember?
Dude sort of knows what he's talking about.
Yesterday's increase of 94 reported by the Chron from county reports was a 4.1% hike in the state's numbers. Fifty-eight (62%) of these were in Los Angeles County, although several Bay Area leaders who were part of the state's first six county orders three days before the statewide one have expressed fear that if things open up, the high rates will return.
A team at the LAT report that the pace of the reopening in Los Angeles County is still unknown but likely slower than surrounding counties.
[Mayor Eric] Garcetti said Monday that different cities would need to take different steps to emerge from the pandemic-induced shutdown and that city and county officials were still trying to determine the safest course.
“Our timing on opening may vary from other parts of the state,” he said. “I will reopen our city with careful consideration, guided by public health professionals.”
The mayor said he did not expect city businesses to be able to offer curbside delivery on Friday in step with Newsom’s outline. L.A.'s Safer at Home order is in effect until May 15 and Garcetti said that he hoped steps restricting commerce could begin to be rolled back by then.
WILL PHASED-IN REOPENING WITH RESTRICTIONS WORK FOR BUSINESS? A team at the Times write that not all businesses are sure that reopening with new restrictions would allow them to break even.
Social distancing and sanitation protocols are likely to stay in place until testing, contact tracing and a vaccine become widely available. State and local officials are working to hash out exactly what that will mean for reopened businesses, but the basic principles are familiar enough by now: Staff and customers must wear masks; the number of people allowed in an establishment must be reduced to allow for six-foot spacing when possible; anything that people touch needs to be disinfected, frequently.
In the article, they look at each major sector, including restaurants and bars, retail, Hotels, hands-on services/personal care, sports, and movie theaters.
On a similar theme, the Chron's Phil Matier writes that partial reopening, whenever it may happen in San Francisco, may not help the city's small businesses.
Meanwhile, it may not change much in San Diego County, reports Brittany Meiling in the SDUT -- many shops have been doing curbside pickup all along and believed they were in compliance with the county health order.
Many retail companies that were forced to close their stores during the shutdown have been offering curbside pickup for weeks. Big chains like Nordstrom, Kohl’s, GameStop, and JoAnn Fabrics have had drive-up service and curbside pickup throughout much of the shutdown.
Even mom-and-pop retailers have been offering this service to maintain a small stream of income while their stores sit empty.
“Have (government officials) seen a retail store in the past two months? We’re all doing curbside pickup,” said Melanie Michoud, owner of clothing store Graffiti Beach in South Park and boutique Thread & Seed in Bankers Hill.
BEACHIN' DUDE: Yesterday, Governor Newsom announced that his Administration had reached agreement with local officials in Dana Point, Seal Beach, and Huntington Beach to allow them to reopen their beaches for non-passive activities. They are added to Laguna Beach and San Clemente, which had been announced on Monday.
After being left out off the list and with Newsom facing accusations of playing favorites for the AD74 race, Newport Beach was told this morning that it could begin a phased reopen today.
SCHOOL DAZE: John Fensterwald writes for EdSource on the brutal budget situation that could be ahead for schools.
State officials insist it’s too early to predict the size of the fiscal hole in the 2020-21 state budget. The filing deadline for the income and capital gains taxes for last year has been pushed back to July, and the path of the coronavirus remains unpredictable.
Next week, when he releases the May revision of the state budget from January, Gov. Gavin Newsom will likely say it’ll be bad, but stay tuned for the details later this summer.
When he closed schools in March, Newsom assured K-12 schools they’d get their full state funding for 2019-20 year as long as they agreed to feed low-income students, provide distance learning for all students and child care for essential workers. Districts won’t directly be affected by a drop this year in the funding through Proposition 98, the formula that determines how much of the General Fund goes to K-12 and community colleges.
But 2020-21 will be painful. Prop. 98, a constitutional provision that voters passed in 1988, is a complicated formula. But as a rule of thumb, K-12 and community colleges receive 40% of the General Fund each year. A 40% slice of the LAO’s estimated $28 million drop in revenue for the coming year would be $11.2 billion for K-12 and community colleges. That compares with a cut of $7.4 billion in Prop. 98 in 2008-09, the worst single year during the Great Recession.
In terms of percentages, the Prop. 98 drop in 2008-09 was 13%, about $1,200 per student. Prop. 98 has grown more than $30 billion since the nadir of the Great Recession and a loss of $11 billion next year would be 14 or 15%, about $1,700 per student. And that’s for a “moderate” recession; the COVID-19 recession is looking to be severe, at least for the next year or two.
MASKED COMPANY? For CalMatters, Laurel Rosenhall looks at the mysterious purchase of nearly $500 million in masks from a brand new company run by two Republican operatives, a deal that failed and led to the controversial $1 billion purchase from a Chinese company.
The recipient: Blue Flame Medical LLC, a Delaware-based company headed by two Republican operatives who jumped into the medical supply business on March 23. The pair — Mike Gula from Washington, D.C., and John Thomas of Southern California — had vowed, in their words, to help “fight Covid-19 with the industry’s broadest product selection from hundreds of suppliers.”
Within hours of the enormous wire transfer, the deal was dead and California was clawing its money back — $456.9 million, nearly half of what the Legislature had allocated for the state’s pandemic response. The payment to Blue Flame and cancellation of the deal six hours later were revealed in copies of checks, wire transfer receipts and emails obtained by CalMatters through a public records request.
It’s unclear why California decided to make such a large purchase for 100 million face masks from a new and untested company. Days ago, Maryland canceled its own order with Blue Flame and asked the state attorney general to investigate the company for its failure so far to deliver the supplies. And California Democratic Rep. Katie Porter also has raised questions about the company’s credibility.
The media and several legislators have been trying to get access to the newer $1 billion contract, but the governor's Administration has refused, saying that it is protected by attorney-client privilege.
PRISONS: KQED's Marisa Lagos reports on the spread of COVID-19 in California's prisons, particularly at the Chino Institution for Men.
More than 370 inmates and at least 164 staff members at California state prisons are now infected with the coronavirus — the majority at a single prison in Chino, where hundreds more test results are pending.
In all, 247 prisoners at the California Institution for Men (CIM) in San Bernardino County have tested positive for COVID-19, along with 44 staff members. One inmate has died, while four have been released.
But the outbreak at CIM stands to be much larger: Prison officials said another 287 inmates have tests pending, with results expected over the coming days.
TRIBES: Ryan Sabalow and Dale Kasler in the Bee write that not all Native American tribes are looking forward to a quick reopening.
The state’s largest Native American tribe, the Yurok, on whose reservation Scott’s diner sits, has banned all visitors to its lands, in an effort to keep the new coronavirus out of one of the state’s most vulnerable communities.
For the tribe, it was tremendously painful to close its casino, river jet boat tours and other tourist attractions.
“We absolutely, 100 percent understand the position they’re in,” said the tribe’s vice chairman, Frankie Myers. “Our economy is based around tourism, and we’re suffering right along with everyone else. We get the gravity of this. We see the red in our books just like everyone else does.”
Nevertheless, Myers said, “there no amount of economic loss will ever deter the tribe (from protecting) the health and safety of our elders and our most vulnerable who are at risk.”
MALL RATS: Also in the Bee, Dale Kasler and Darrell Smith explore why shopping malls apparently are not included in Stage 2A reopening, or are they?
Sacramento’s Arden Fair mall, which has been closed since March 17, was holding out hope for Friday curbside service, mall marketing manager Nathan Spradlin said Tuesday before Newsom’s announcement.
Spradlin said the mall would designate a spot in the parking lot in front of the main entrance – between Seasons 52 and BJ’s Restaurant and Brewhouse – for curbside deliveries. Shoppers can drive up, park and have items delivered to their cars without having to leave the vehicle to preserve physical distancing.
Arden Fair officials reviewed Newsom’s Monday statements and believed the plan could pass muster, but were also prepared to drop the idea if shopping malls were left off Friday’s list.
Even if Newsom had given Arden Fair the green light, Spradlin said it was unclear Tuesday how many retailers would participate right away.
Reaction from tenants has been mixed. Stores would have to rush back furloughed workers and “some of our tenants understandably have a lot of logistical hurdles,” Spradlin said. How customers will respond to the new arrangement is another question for retailers, he added.
STRICT SCRUTINY: The AP's Brian Melley reports that federal Eastern District judge John Mendez yesterday upheld the application of health orders applying the prohibition on congregating to religious services.
Pastor Jonathan Duncan had continued to assemble his congregation after the governor banned public gatherings in March despite warnings it was in violation of state and local orders. The church of fewer than 50 members said it was obeying federal guidelines to prevent spread of the virus.
Lodi police entered the church during a service attended by about 30 worshipers in late March and said they were defying the governor’s order. The church responded with a “cease and desist” letter sent to the city and argued they had a First Amendment right to gather and practice their religion.
Mendez said state and local stay-at-home orders were a valid exercise of emergency police powers and didn’t violate the church’s constitutional rights. Mendez noted that the Supreme Court over 100 years ago upheld the government’s right to exercise police powers to promote public safety during a public health crisis.
As I've told many people over the last month, constitutional rights such as the familiar First Amendment ones, Due Process, and Equal Protection that require a strict scrutiny analysis can be infringed upon if:
Health orders are among the most compelling state interests. Closing a restaurant because of a vermin infestation is a governmental taking, but nobody thinks that county health departments shouldn't be able to close Randy's Rat-infested Ribhouse.
The state and local orders were based on medical recommendations from the federal government finding that gatherings that couldn't guarantee a six-foot spacing spread a deadly virus.
So, the lawsuit by Harmeet Dhillon and Mark Geragos is going nowhere but captures media attention. Both are smart lawyers and know that. The lawsuit by Newport Beach councilmember Kevin Muldoon will meet the same fate, but he got his Register article.
It makes for a great final exam question for second-year ConLaw for analysis of the three prongs, but if you arrive at a different conclusion, you likely won't pass the class.
AB 5, ballot measures, bondage, and more after the jumpity jump...
AB 5: Yesterday, Attorney General Xavier Becerra -- joined by the city attorneys of LA, SD, and SF -- filed a lawsuit in San Francisco superior court against rideshare companies Uber and Lyft for the companies' failure to comply with the bill codifying the California Supreme Court's April 2018 decision in Dynamex. That decision made it more difficult to classify those performing work for a company as independent contractors. AB 5 in 2019 codified that decision while granting exemptions to many professions, but did not include "transportation network" companies.
After AB 5 took effect on January 1, 2020, the companies did not reclassify drivers as employees, which would have required them to pay payroll taxes including unemployment insurance. The companies argue that they are a technology service and the drivers are merely connected by them. The state and city plaintiffs allege, among other things, that because the companies set the standards for the drivers' vehicles and fares, that shows elements of control clearly identified as meeting the test requiring drivers to be classified as employees. The plaintiffs argue that drivers meet each other elements of the Dynamex/AB 5 "ABC test."
Uber and Lyft will try to run the clock out on the lawsuit until voters are presented with the issue in the November election. They, along with similar companies providing food delivery services, have submitted 987,790 signatures for an initiative to do so, which almost certainly is enough to qualify.
BALLOT MEASURES: Speaking of ballot measures, two more met the guillotine yesterday:
Thank goodness the unicameral and expansion of the Legislature initiative died. I like the West-facing profile of the current State Capitol, which would have to have been demolished and rebuilt.
BONDAGE: For Capitol Weekly, David Jensen reports on the efforts of the state's stem cell agency's supporters to find signatures through direct-mail in a brutal environment for the initiative to place $5.5 billion in general obligation bonds on the November ballot.
Speaking of brutal environments, if I were still advising community colleges, I'd say to avoid November like a BART third rail. As noted in the School Daze item above, the Legislature will likely be enacting 2020-21 budget cuts in August or in a special session in September. Anything about spending on anything other than backfilling operating budgets, such as capital infrastructure or new grants such as those proposed for the stem cell agency, will likely be greeted with great disdain.
muni matters, Cakeday, and classifieds after the jump...
SACTOWN: The Bee's Tony Bizjak looks at how Sacramento Intergalactic Airport is faring and, well, it's not good.
Passenger levels have plummeted 94 percent in slightly more than one month during the coronavirus pandemic as the Sacramento and national economies went into a springtime hibernation. Airlines For America on Sunday reported only 17 passengers on average per domestic flight last week.
Not only is the commercial aviation industry among the hardest hit, it may be one of the slowest industries to come back. Recent national polls show that would-be fliers may be unwilling to board a tightly packed airline this summer and possibly beyond.
The airport notably will receive $49.9 million in financial assistance as part of the federal government’s CARES Act emergency stimulus.
That serves as a pressure release valve, allowing the airport to cover three months of expenses, help pay its still-hefty debt service from construction of the Terminal B main building and concourse building in 2011, and allowed it to provide rent relief for airport concessions, Nichol said.
In the Bee, Benjy Egel lists the 30 restaurants in Sacramento that will be participating in the program to provide three meals per day to area seniors.
TAFT: In the LAT, Susanne Rust reports on the trifecta of economic whammies hitting the town of Taft in western Kern County. In addition to the stay-at-home orders, Rust reports on the other impacts hitting Taft:
With prices and demand for oil down, the thousands of pump jacks that ordinarily bob up-and-down on the horizon are at a virtual standstill. That is adding to the misery on main street, where restaurants, gyms, stationery shops and other stores have been ordered closed.
And then there’s the fact that another major employer, the privately owned Taft Correctional Institute, closed its doors on April 30 after sending hundreds of uninfected prisoners to coronavirus hot spots across the country. The decision to close the federal prison was made last fall, long before the pandemic struck, but now the economic pain is hitting.
“It’s been a rough couple of months,” said Mayor Dave Noerr, who is pivoting as fast as he can to get his town’s economy up and running again.
CAKEDAY: Happy birthday to Sheila DeBlonk, John Kabateck, and Mac Zilber!