COVID-19 Response and Recovery Proposals in the Budget

State emergencies, including man-made and natural disasters, require a multifaceted response, which integrates federal and state funds, programs, and services, to meet local needs and avert further risk to life and property.

In the case of the COVID-19 pandemic, the state has had to take extreme and rapid steps to protect the health and safety of Californians. Within one week in March 2020, the state went from open-for-business to implementing a strict stay-at-home order for everyone not directly engaged in what government considered an essential and critical business activity.

Since that time, different regions of the state have opened, closed, and re-opened based on both local and state restrictions.  The state is currently operating under the Blueprint for a Safer Economy and a series of industry- and activity-specific guidance.  At the time of this briefing being written, 52 out of 58 California Counties are operating under under Tier 1, the most restrictive tier, which covers over 99% of the state population.

It is estimated that since mid-March 2020, hundreds of California businesses have shut their doors permanently and over 13.9 million unemployment insurance claims have been filed with the state’s Employment Development Department, which have resulted in more than $122 billion in unemployment benefits being paid to impacted workers and their families.

The Governor's Proposed Budget for FY 2021-22 

The Governor's proposed budget for 2021-22 presents an expenditure plan of $227.2 billion with $164.5 billion in General Fund expenditures, including significant investments to help catalyze an equitable, inclusive and broad-based economic recovery.   This proposed budget reflects a $16 billion estimated budget surplus moneys. 

 

Top Level Investments in Combating COVID-19 and Economic Recovery

  • $372 million to speed up administration of vaccines across all of California’s 58 counties.

  • $14 billion in investments designed to support economic recovery with a focus on those Californians who have been most impacted by the pandemic.

  • $90 billion to support California schools – largest commitment to public K-12 education in California’s history. 

  • $34 billion in actions to strengthen the state’s fiscal position, including providing for budget reserves and discretionary surplus deposits.

The California Department of Finance host the official California E-Budget, which also includes links to budget trailer bill language and finance letters related to the 2021-22 budget.  Official California Budget Website

The Assembly Jobs Committee prepared a summary of key economic, community, and workforce development items included in the California Governor’s proposed budget for 2021-22.  Among other funding recommendations, the Governor's Budget proposed a $777.5 million for a California Jobs Initiative, which focuses on job creation and retention, regional development, small businesses and climate innovation.  This includes:

  • $340 million for the California Competes Tax Credit, including a new infrastructure grant and increases the annual allocation cap from $180 million per year to $280 million per year.

  • $250 million grant program that dedicates $50 million to “high-need, high-opportunity areas of the state.”

  • $100 million to expand the Main Street Small Business Tax Credit from $100 million to $200 million. 

  • $35 million to expand the California Dream Fund, which was authorized and appropriated $10 million as part of the 20-21 budget deal. 

  • $50 million to recapitalize the Small Business Loan Guarantee programs at the IBank. 

  • $50 million to the California Infrastructure and Economic Development Bank to undertake activities that benefit underserved businesses in California.   This may include the California Rebuilding Fund

  • $100 million to expand the sales tax exclusion program administered by the California Alternative Energy and Advanced Transportation Financing Authority. 

Immediate Action Agreement for Relief to Californians Experiencing Pandemic Hardship

On February 17, 2021, the Governor and Assembly and Senate Leadership announced a $9.7 billion COVID-19 Relief Package, which included the following (related legislation):

  • $2.1 billion for the CA Small Business COVID-19 Relief Grant Program to provide grants up to $25,000 for small businesses impacted by the pandemic. $50 million of which is set aside for cultural institutions (no size cap).

  • $2 billion tax cut by conforming CA tax law to new federal tax treatment for loans provided through the Paycheck Protection Plan and Economic Injury Disaster Loan programs, which allows borrowers to deduct up to $150,000 in expenses covered by those loans.  

  • $116 million in fee cuts by waiving various fees for two years for heavily impacted service industries, including 59,000 restaurants and bars licensed through ABC and to the more than 600,000 barbering and cosmetology individuals and businesses licensed through the Department of Consumer Affairs.

  • $400 million in new federal funds that will provide stipends of $525 per enrolled child for all state-subsidized childcare and preschool providers.

  • Extends care for children of essential workers through June of 2022, and funds increased access to subsidized childcare for more than 8,000 children of essential workers and at-risk children – who are not currently served in the system – through June of 2022.

  • $2.3 billion to provide a one-time $600 grant to households receiving the California Earned Income Tax Credit for 2020

  • 470 million to provide an additional one-time $600 payment for individuals with Individual Tax Identification Numbers (ITINs), which were not able to receive pervious federal economic impact grants.

  • 243 million to provide an additional $600 grant for families enrolled in CalWORKs.

  • 240 million to expand eligibility for CalWORKs by exempting the supplemental federal Unemployment Insurance benefits from income calculations.

  • $750 million to provide an additional $600 grant for individuals enrolled in Supplemental Security Income (SSI) or Cash Assistance Program for Immigrants (CAPI).

  • $24 million for financial assistance and services through Housing for the Harvest – a program providing support for agricultural workers who have to quarantine due to COVID-19.

  • $35 million for food banks and diapers.

  • $100 million for emergency financial aid for qualifying low-income students.

  • Restores previously enacted reductions, effective July 1st, for the UC, CSU, the Judicial Branch, Child Support Services and for moderate-income housing.

COVID-19 Response Actions Approved in the 2019-20 Budget

Even with the many competing priorities for funding, the 2019-20 budget was able to support a number of important actions to help small businesses, workers, and communities meet the economic challenges of the COVID-19 pandemic, including: 

  • Access to Capital:

    • $50 million for use by the Small Business Finance Center at the IBank.  The Governor previously transferred $50 million from the State Disaster Fund to the Small Business Finance Center for financial assistance to small businesses impacted by the coronavirus pandemic.

    • $20 million for the Small Business Technical Assistance Expansion Program ($17 million) and Capital Infusion Program ($3 million), administered by the Office of the Small Business Advocate.

    • Waived the $800 minimum franchise tax for small and medium-size businesses during their first year of business creation.  

    • Retained and expanded eligibility under the California Earned Income Tax Credit to individuals who file taxes through independent identifier numbers with small children.

    • Rejected the $250 million proposal to fund the Climate Catalyst Revolving Loan Fund and, instead, establishes a Climate Catalyst Revolving Loan Program at the IBank.

    • Funding will be provided through non-state governmental entities and private sources.  The Strategic Growth Council will advise the Legislature on categories to fund, and a report on the projects funded will be annually presented to the Legislature. 

    • $25 million to establish the California Rebuilding Fund in an effort to expand underserved small business lending through California Community Development Financial Institutions and mission-based lenders.  Another $12 million was provided through administrative action in December 2020.

  • Education and Workforce

    • $300 million to support the K-12 career tech programs, including $150 million to the California Career Technical Education Incentive Grant Program.

    • $37 million to the Adult Reentry Grant Program.

    • Full funding to our adult education programs.

    • Full funding to the Community College Strong Workforce Program.

The Assembly Jobs Committee prepared a summary of key economic, community, and workforce development items in the 2020-21 final budget

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