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The Nooner for Tuesday, May 19, 2020, presented by SYASL Partners
Happy Taco Tuesday! Or, to reframe it, the "What can I make into tacos out of my fridge" day?
REOPENING: Over the weekend, the word was that the era of NoonerAtNoon midday press conferences that have been carried statewide by the governor was over. By yesterday, he was back behind the mic at a Napa restaurant to make a surprising announcement -- the state was changing the regional variance criteria for moving to the advanced Stage 2 reopening, which I call Stage 2B.
This advanced stage allows dine-in restaurants and shopping malls to reopen with limitations, but does not allow "high-risk" establishments such as hair and nail salons to open as they are in Stage 3. Counties still have to fill out the an attestation of meeting the revised criteria with the state.
It was a big move and followed several high-profile protests at the State Capitol and in cities around the state. Governor Newsom said that he heard from local officials that the initial variance criteria were unreasonable, such as:
The new criteria for the case metrics is now:
There remain several other criteria such as testing, contact tracing, hospital surge capacity, and skilled nursing home preparedness.
The California Department of Public Health (CDPH) also states in its release:
The Department also announced that starting today, some sectors of the economy statewide can begin reopening with modifications, including office spaces and counseling services in places of worship, curbside libraries and drive-in movie theaters.
Governor Newsom said yesterday that his Administration believed that, under the new criteria, 53 of the state's 58 counties would be eligible for a variance. When asked, he didn't identify the five that would not, although he did mention challenges in Kings and Tulare counties relating to meatpacking and skilled nursing facilities.
However, Alexei Koseff writes in the Chron that a survey of data found at least 6 Bay Area counties that would be ineligible based on the testing and tracing requirements. Many are just entering the initial Stage 2 phase.
While Los Angeles County has seen falling death rates the last couple of days, it doesn't appear prepared to reopen soon. Testing and tracing in the nation's most populous county appears to be a struggle, particularly with the number of homeless.
Elected officials were particularly unhappy with the original "no death" requirement as they pointed out that the only deaths in their communities were among elderly in skilled nursing facilities, who are already vulnerable to have fatal encounters with illnesses like influenza.
Applying for a variance to move to Stage 2B is still voluntary for counties, but many are moving forward as early as today. Here is news from counties about their plans I've seen this crazy morning:
Amador, Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt, Inyo, Lassen, Mariposa, Modoc, Nevada, Placer, Plumas, San Benito, Shasta, Sierra, Siskiyou, Tehama, Trinity, Tuolumne, Sutter, and Yuba have already completed attestations.
Even if granted a variance, it doesn't mean that your favorite restaurant will reopen right away. There are training and other implementation criteria for the sector. The same is true for shopping centers.
Also in yesterday's presser, Governor Newsom said that he though hair and nail salon are weeks, not months, away. My yak-like hair needs it bad. He also said that he thought professional sports, without fans and with prescriptive requirements, were likely possible in early June. Again, that will be up to each county. Newsom acknowledged that there is significant economic pressure to allow the fanless sports, even if awkward. In many cases, teams rely on television revenue to make lease or mortgage payments on their venues.
Although, Jason Anderson writes in the Bee that the plan by the MLB to reopen a shortened season around July 4 without fans may put minor league teams like Sacramento's Rivercats out of business.
While Major League Baseball and its players quarrel over how to split billions in reduced revenue dollars under a return-to-play proposal, minor league teams face even starker economic realities due to the coronavirus pandemic. From the Pacific Coast to Portland, Maine, the business of minor league baseball churns on ticket sales, in-game advertisements and game revenues like popcorn and pretzel sales.
One of Minor League Baseball’s highest-ranking officials said some teams probably would not survive a summer-long shutdown if the 2020 season is canceled due to restrictions on live-audience sporting events.
“I think it’s probably fair to assume that,” said Jeff Lantz, MiLB’s senior director of communications. “Even in a good year without rainouts, we have teams that will make less than $100,000 in a year, and certainly there are some that don’t make money each year. Those teams are really going to have a hard time here.”
California Gov. Gavin Newsom said Monday professional sporting events could return without spectators in early June, but Lantz said that isn’t a viable option for minor league teams.
CASINOS: A team for the SDUT reports on yesterday's reopening of the Viejas Casino in Alpine.
The 8 a.m. reopening took place despite misgivings from county officials who said reopened casinos would breed the kinds of gatherings known to facilitate the spread of COVID-19. It also came despite California Gov. Gavin Newsom’s request that local tribes delay their reopening plans.
County officials reiterated on Monday that they disagreed with local casinos resuming operations.
“We’re not in agreement, but we do not have the jurisdiction, so the best thing we can do is review their plans and ensure that there are measures built in to prevent the spread (of COVID-19,)” said Dr. Wilma Wooten, the county’s public health officer.
Governor Newsom wrote to tribal leaders on Friday asking them to hold off on reopening. Viejas appears to be the first to reopen, but several are following this week.
The tribes who run the casinos have sovereign authority and are within their rights to plan their own reopening — a fact both local and state officials have acknowledged. Viejas was the first to reopen, but Sycuan Casino Resort in El Cajon plans to reopen on Wednesday, and Valley View Casino & Resort in Valley Center is scheduled to welcome guests on Friday. Harrah’s Resort in Valley Center announced Monday that it would reopen May 22.
The recently opened Hard Rock "Sacramento" in Wheatland says on its website that it is taking guidance from the Yuba-Sutter Health District and Governor's Office, and it doesn't appear any other NorCal casinos have reopened.
PROJECT ROOMKEY: In the LAT, Doug Smith and Benjamin Oreskes report that 15,000 hotel rooms statewide have been leased under Project RoomKey, but nearly a half remain empty.
In some counties, the largest impediments have been delays in preparing leased rooms for occupancy, not, as the governor has complained, NIMBY interests at the local level. In other counties, it has been a shortage of staff to care for homeless residents, providing services, such as food services, security, nursing and case management.
“This has not been a challenge of leasing hotels,” said Sacramento Mayor Darrell Steinberg, who is co-chair of the state’s homelessness task force. “The challenge is much more in insufficient numbers of service providers to deal with a much larger capacity of people and a big question about rehousing.”
Under the program, county officials are responsible for determining how many rooms to set aside for homeless people. But the actual implementation of Project Roomkey is forcing officials from many counties to question how many homeless people “the program can bring in,” Steinberg said. That’s because there aren’t enough service providers to help run the hotels and eventually help transition the residents into permanent housing.
One challenge is that the program is meant for homeless at high risk of COVID-19, so they are not necessarily available for the 6,000-7,000 sleeping under or next to freeways in Los Angeles that a federal judge ordered the city and county for whom to find housing or for the large tent camps in San Francisco. That is because the 75% FEMA reimbursement under the federal emergency is likely only available for high-risk populations.
more after the jump...
BUDGET: Yesterday, post-May Revision budget committee hearings got underway. Opening the Senate Budget and Fiscal Review Committee from the very different position of the Senate Rostrum, chair Holly J. Mitchell (D-Los Angeles) announced the expedited process. Each subcommittee will meet once from tomorrow through Monday (over the holiday weekend) and then the full committee will reconvene on a yet-to-be-announced date. It is unclear whether the subcommittees will take actions or if they will be done by the full committee and largely developed behind closed doors (not all that different from usual).
The Senate committee was fairly amicable with only a few tension spots between Senators, some present and others video-conferencing from their district offices. The Department of Finance (DOF) and Legislative Analyst Office (LAO) staff members similarly participated remotely. It worked pretty well -- there were no toilet flushes like the Supreme Court's first foray into remote teleconferencing -- but I can't see former senator Carole Migden tolerating those cell phone beeps.
I didn't keep great notes since I was watching on the 'puter, which is where I usually take notes and, well, I know there's a pen around here somewhere. Members expressed concerns about specific cut proposals, perhaps most vociferously by Maria Elena Durazo (D-Los Angeles) about rollbacks of existing and proposed coverage of undocumented immigrants.
Senator Jim Nielsen (R-Gerber), the longest-serving current legislator having served from 1978-1990 before term limits and then post-term limits beginning anew in 2008. He expressed concern about cuts that could affect the viability of Paradise, the town being rebuilt that was largely destroyed in the 2018 Camp Fire.
Nielsen's biggest point was something he is known for -- the strength of the Legislature as a co-equal branch of the government. In its overview of the May Revision and slides presented yesterday, the LAO highlighted some areas of concern for legislators to think about where the Newsom administration has perhaps expanded decision-making beyond the comfort level of legislators, primarily in COVID-19 emergency-response spending.
After chair Mitchell echoed Nielsen's concerns, DOF chief deputy director Vivek Viswanathan said that DOF/Newsom Administration was informing the Joint Legislative Budget Committee (JLBC) pursuant to SB 89, the bill approved on March 16 before the Legislature went on recess amidst emerging stay-at-home orders. That bill appropriated up to $1 billion for COVID-19 response in addition to other available emergency funding. It required the Administration to notify JLBC in writing 72 hours of expenditures before expenditures. Mitchell stated that the JLBC language was meant for the period the Legislature was not in Sacramento, but it is now back in Sacramento -- sort of.
Of the $1 billion, $800 million has been spent, although 75% is expected to be reimbursed by FEMA. The Administration proposes $6.4 billion more in the May Revision for emergency response, spending that also likely be reimbursed by the feds.
The legislative concern didn't come as a surprise to the Administration, as the LAO detailed expenditures and the Legislature held subsequent hearings. Some expenditures have also gained substantial media attention, like the $457 million sent as part of a $609 million deal for masks to Blue Flame Medical LLC. The only problem was that Blue Flame was a three-day-old company run by two Republican political operatives. Laurel Rosenhall reported for CalMatters on the deal.
After the Blue Flame contract was canceled, the N95 mask procurement shifted directly to a Chinese company in a $1 billion deal. However, legislators and the media were frustrated when the Administration withheld the details of the contract for a month. When the contract was finally released, the holdup was explained -- the masks hadn't been certified by the Occupational Safety and Health Administration and were still in China. Because of the failure to timely deliver, $247.5 million was returned to the state by the Chinese company.
The funding for the mask contracts was not part of the $1 billion in SB 89 approved by the Legislature on March 16 but rather the state's Disaster Response-Emergency Operations Account, where money is transferred from the Special Fund for Economic Uncertainties, or the state's general reserve. Nevertheless, the details of the procurement beginning with the fumbled contract with Blue Flame and subsequently the Chinese contract, there is obviously great legislative interest as constituents read the story.
This is not a situation like when former governor Gray Davis said that the Legislature's job was to "implement my vision" or when former governor Arnold Schwarzenegger called legislators "girlie men," but it does mark the end of the Newsom honeymoon (mostly) 16 months into his governorship.
There isn't a "right" side here. There have certainly been missteps during this historic time, but we've seen them by the federal government and many other states. Instead, it's a moment to regroup and the Legislature is back (sort of -- functional floor sessions with physical distancing need to be demonstrated), and with the reopening progress announced yesterday will settle most of the protests and frustrated local officials.
Meanwhile, two Assembly Budget subcommittees met at the same time I was watching the Senate full committee. I don't have deets on them, but was just appreciative of some non-CNN time for much of the afternoon. Today's break from the gnus will be for Assembly Sub 2, which will be reviewing the proposed higher education budget at 2:30.
more after the jump...
PG&E: For Politico, Colby Bermel reports on last Thursday's gut-and-amend of SB 350 (Hill), which paves the way for "Plan B" -- a state takeover of Pacific Gas & Electric Company in case the company fails to exit bankruptcy by next month's deadline. The bill includes principal coauthors (Dodd, McGuire, Holden) by major legislators involved in the issue and was crafted by the Newsom Administration. Bermel writes:
Lawmakers acknowledged Monday that PG&E's bankruptcy plan maintaining its investor-owned utility status is on a path toward approval. Still, the authors of SB 350 emphasized the importance of planning for a "Plan B," regardless of whether that comes in the coming months or the coming years. The bill is scheduled for a policy committee hearing next Thursday.
Sen. Jerry Hill (D-San Mateo) told POLITICO that PG&E already accepted the possibility of a state takeover when it adopted Newsom's terms, which include both short- and long-term triggers. If any were activated, Hill said, "there would be consequences, and that's part of the agreement. These are the consequences."
"I think where the disconnect is [PG&E] never took us seriously, that we would go to the extent of placing a Plan B in place," he continued. "I don't think they felt that we were committed enough to establish and create in statute a Plan B."
Nevertheless, Hill said, "My hope is it's never used. And I hope PG&E has, after 10 years of failure, has a new future and a path to success, and that the Plan B never be executed." His remarks echo those of U.S. Bankruptcy Judge Dennis Montali, who prefaced his approval last month of Newsom-driven reforms by saying he hopes the governor's backup option of a sale process "will never see the light of day."
I'm working on an analysis for November for ATCpro subscribers, but I would say not so fast. Remember that the special election was conducted under stay-at-home without the Democratic ground troops that flipped the seat in 2018 and President Trump, while endorsing Mike Garcia (R), was not on the ballot. He will be in November when Garcia and Assembly member Christy Smith (D) will face off for the full term.
PEDIATRICS: For Capitol Weekly, Bernard J. Wolfson looks at the impact of COVID-19 on pediatric hospitals.
Pediatric hospitals offered themselves as backups to their adult counterparts in case of a surge of coronavirus patients. They suspended nonemergency surgeries and stockpiled protective gear and virus test kits, according to hospital executives and financial analysts.
But, in many regions, the surge was smaller than anticipated – or hasn’t materialized. And children’s hospitals that have offered to take sick kids off the hands of adult hospitals, or extend the age of people they admit, have not seen an influx of patients to fill the beds they emptied. As a result, numerous pediatric facilities, like many of the adult ones, face sharply declining revenues and extra expenses.
STUDENT ATHLETES: Yesterday, a three-judge panel of the Ninth Circuit upheld a district court ruling in a class-action lawsuit alleging that the NCAA's limitations on revenue-sharing by member institutions to student athletes for revenue generated from the use of a student's name, image, and likeness violates federal antitrust laws.
This follows the enactment of SB 206 (Skinner) in California last year allowing the state's universities to provide such compensation and allow student athletes to obtain representation for negotiation for such. The bill exempted community colleges, but requires the Chancellor of the California Community Colleges to convene a workgroup to study the issue.
cakeday and classifieds after the jump...
CAKEDAY: Happy birthday to Vince Hall, Aaron Skaggs, and Don Wilcox!