This past week, Governor Newsom issued 3 new executive orders.
Statewide Rental Eviction Moratorium: California landlords will not be able to evict tenants while the state fights coronavirus. The ban will be in place through May 31, 2020. The moratorium allows tenants who cannot pay their rent because of COVID-19, the disease caused by the coronavirus spreading through the state. It requires tenants to declare in writing that they can’t pay their rent because of the pandemic within a week after their rent was due.
State Prisons & Juvenile Facilities: Meant to reduce the risks of COVID-19 in correctional settings, this order directs the California Department of Corrections and Rehabilitation (CDCR) Secretary to temporarily halt the intake and/or transfer of inmates and youth into the state’s 35 prisons and four youth correctional facilities. Those inmates and youth will remain in county custody for the next 30 days. This period can be extended if needed. This action builds on the state and local correctional and public safety leaders’ longstanding partnership, to protect public health and safety in the context of the COVID-19 crisis.
Judicial Council Emergency Authority: Specifically, the executive order empowers the Judicial Council and the Chief Justice of the California Supreme Court to take necessary action to be able to conduct business and continue to operate while responding to the COVID-19 pandemic. The order allows the Judicial Branch to allow for remote depositions in every case (the law had previously required that parties be deposed in person) and electronic service of process. Additionally, the order leaves the Judicial Branch discretion to make any modifications to legal practice and procedure it deems necessary in order to continue conducting business.
Governor Gavin Newsom Announces Major Financial Relief Package
Last week, Governor Gavin Newsom also announced that financial institutions will provide major financial relief for millions of Californians suffering financially as a result of the COVID-19 outbreak. Governor Newsom secured support from Citigroup, JPMorgan Chase, U.S. Bank, and Wells Fargo and nearly 200 state-chartered banks, credit unions, and servicers to protect homeowners and consumers. Under the Governor’s proposal, Californians who are struggling with the COVID-19 crisis may be eligible for the following relief upon contacting their financial institution:
90-Day Grace Period for Mortgage Payments: Financial institutions will offer, consistent with applicable guidelines, mortgage payment forbearances of up to 90 days to borrowers economically impacted by COVID-19. In addition, those institutions will:
Provide borrowers a streamlined process to request a forbearance for COVID-19-related reasons, supported with available documentation;
Confirm approval of and terms of forbearance program; and
Provide borrowers the opportunity to request additional relief, as practicable, upon a continued showing of hardship due to COVID-19.
No Negative Credit Impacts Resulting from Relief: Financial institutions will not report derogatory tradelines (e.g., late payments) to credit reporting agencies, consistent with applicable guidelines, for borrowers taking advantage of COVID-19-related relief.
Moratorium on Initiating Foreclosure Sales or Evictions: For at least 60 days, financial institutions will not initiate foreclosure sales or evictions, consistent with applicable guidelines.
Relief from Fees and Charges
For at least 90 days, financial institutions will waive or refund at least the following for customers who have requested assistance:
Mortgage-related late fees; and,
Other fees, including early CD withdrawals (subject to applicable federal regulations)
State Budget Developments
With the unexpected economic implications brought on by COVID-19, the state budget has been thrown into disarray. California, as well as the rest of the country, has been anticipating an economic downturn for quite some time. However, COVID-19 became the catalyst that no one saw as it has forced the economy to grind to a near halt in many sectors. There is a very real chance that California’s surplus will be completely wiped out in responding to the current pandemic.
From our conversations with budget staff, It is believed that the legislature will pursue what is called a “workload budget” - meaning that the only funding that will be dealt with prior to the constitutionally required June 15th legislative budget passage deadline will be for programs that are currently funded in an ongoing manner (Medi-Cal, Prop 98 for schools, etc) - AKA, the current workload the state has responsibility for. The only other funding items that will be considered during this initial state budget will be Covid19 related emergency measures. However, it is also anticipated that lawmakers could be asked to extend their work beyond the traditional end of legislative action in August, taking budget actions related to the coronavirus response into the fall.
This means there will be virtually no legislative or budgetary changes that do not respond directly to the public health crisis in the short and potentially longer-term. This is in large part because the Governor and legislative leaders recognize that while we have a robust Rainy Day fund, overspending money now is deeply dangerous as revenue and surpluses will continue to evaporate within the next few months.
While the economy is notoriously hard to anticipate in crisis times, and this will only be exacerbated by the extension of tax deadlines, as that is a major source of revenue for California and fiscal projections that guide the state budget revenue amounts are historically largely dependent on April’s tax filing information. With revenue projections delayed and likely massively decreased, this means that decision-makers and their staff, while not working completely blind, are necessarily tunnel-visioned.
The implications of the federal relief packages, both those passed already and the remaining efforts that will unfold in the coming weeks and months will be massively important for California’s state budget and our 40 million residents. UWCA will be tracking all of this closely and working to inform both levels of budgeting via analysis and advocacy. Making our voice and the voice of our communities heard has never been more critical.