Last week during the six-hour Senate and Assembly COVID-19 response subcommittee meetings, tens of thousands viewed the livestream, hearing familiar themes and a few new twists regarding the state of California’s economy amid a COVID-19 Recession. Expert presenters from the California Department of Finance, Legislative Analyst's Office and the California Budget and Policy Center all agreed that California is going to be hit hard by the economic impacts of the novel coronavirus. Because of the unpredictability of not only the virus, but also of the federal response, individual compliance, and the delay of tax revenue for the state, no one knows how big of a recession we will have or how long it will last.
Instead of the usual revenue projections created from income and sales tax collection, presenters gave general statistics about what this COVID-19 recession could look like. While the state originally anticipated a short run for COVID-19 and $1.1 billion in associated state spending, the Department of Finance is unsure if even the newly projected spending of $7 billion will be enough. We heard that this could potentially be a typical recession, something like the Great Recession, or something even worse resulting in over $120 billion in lost revenue over the next three years. And with income taxes delayed and sales taxes deferred, right now California is giving out more in refunds than it is taking in.
This loss of revenue in cities like Oakland, where 86 percent of businesses are owned by people of color and considered small businesses, will not only cause an immense loss in wealth for people of color, but strip them of their last remaining grip on this quickly gentrifying city. Decades of redlining, housing segregation, and unequal school funding, as well as inequitable, low pay and limited benefits, left communities of color overall with less assets, making them most vulnerable to the economic hardships created by the COVID-19 recession.
The presenters at the committee meeting also agreed that the state’s ability to support Californians depends largely on the federal government's response. While the Coronavirus Aid, Relief, and Economic Security (CARES) Act and FEMA reimbursements will help, the experts said they will not be enough, especially for communities of color and undocumented people. In fact, Gov. Newsom has written a letter to Speaker Pelosi asking for an additional $1 trillion in aid to states.
Chris Hoene, Executive Director of the California Budget and Policy Center, shared that though undocumented people make up six percent of our population, have largely lived here for more than a decade, pay $3 billion a year in taxes, they remain locked out of receiving necessary supports like the federal stimulus check, unemployment benefits, housing aid, and health care, essentially subsidizing supports for the rest of the nation. Director Hoene emphasized the need to expand aid with continued support, not a one-time check if we want low-income communities of color who are most impacted to survive the COVID-19 recession. Echoing advocates from across the state, he suggested expanding the California Earned Income Tax Credit and Young Child Tax Credit to offer greater assistance and include undocumented families.
Multiple representatives shared the pains expressed to them by their local health care providers. We had heard the stories of overworked nurses and doctors, but less about the stories of vacant clinics on the verge of bankruptcy. Representatives explained that hospitals, clinics, and small medical practices had been forced to limit or completely stop all non-medically necessary procedures to help prepare for a surge in hospitalizations that never came. These procedures are often the ones that keep the lights on, and now providers fear that when the surge of COVID-19 patients does come, there will be no hospitals or clinics to serve them. In rural communities, especially those with large populations of low-income people of color which may have only one provider for miles, this would be devastating.
Presenters and legislators also engaged in extended conversation on homelessness, incarceration, food access, debt collection, and the acquisition of personal protective equipment. As Sen. Nancy Skinner of Berkeley noted, while it is commendable that some incarcerated people and some people held in detention centers have been released, inadequate supports for re-entry can put released individuals at risk of homelessness and exposure for the communities to which they return. Based on testimony from those impacted and policy advocates, The Greenlining Institute is extremely concerned that eligibility for homeless services and other supports for formerly incarcerated people has not been made clear to counties, and that access to aid like Small Business Administration loans has been completely denied.
The COVID-19 recession cannot be fixed by the reserves California has built over the last few years, and our solutions so far have not been sufficient. Californians need more support with housing, food access, jobs, and much more. Aid in the form of a one-time payment (like the recent federal program) or that leaves out certain communities, whether they are undocumented or formerly incarcerated, is not acceptable.
States have significantly less ability to incur and recover from debt than the federal government. If we as a nation hope to preserve lives, the federal government must support ALL people in this country. While the economic cost to all of us will be significant, we must prioritize saving lives over saving money.
Christian Beauvoir is Greenlining’s Health Equity Fellow. Follow him on Twitter. To receive updates on our ongoing response to the Coronavirus pandemic, sign up for The Greenlining Institute's newsletter.