Pending Budget Issues

The Governor proposed that his Administration would submit its major initiatives through the budget approval process rather than the traditional bill approval process.   Below is a list of pending issues related to small business development and economic recovery.  The issues reflect ongoing stakeholder recommendations and unresolved concerns.

State Small Business Credit Initiative:  The American Rescue Plan Act of 2021 included $10 billion for the reauthorization of the State Small Business Credit Initiative (SSBCI), which was initially created in 2010, to strengthen state programs that support financing of small businesses.  The SSBCI includes a number of components, including a formula allocation to states, as well as several competitive grant set asides.  California is estimated to receive $895 million under the formula allocation, but in order to receive the funds, the state is required to submit a plan for the use of those funds by December 11, 2021.  The Governor identified the new federal funding in his May Revise, and the IBank has established an SSBCI working group to help guide the development of the state plan.  The Legislature, however, has not yet identified its role in reviewing and approving the general use of the $895 million.

Small Business Technical Assistance Expansion Program:  Budget trailer bill provisions expanded the pool of eligible applicants for the previously oversubscribed grant program.  Stakeholders have testified that they are expecting a greater need for small business technical assistance in the 2021-22 fiscal for three reasons.  One, federal funds which supplemented activities in 2020 will no longer be available beginning in October 2021.  Two, reopening and repositioning small businesses in this constantly evolving COVID-19 economy is a very challenging.  While many businesses were simply closed last year, business operations are considerably more complex now.  Third, a budget trailer bill expanded the pool of eligible applicants without increasing funding, SB 151 (Senate Budget Committee) Chapter 74, statutes of 2021. 

California Dream Fund:  The 2021-22 Budget and a related trailer bill provisions authorized the new program, including funding for seed grants, outreach, and administrative overhead, SB 151 (Senate Budget Committee) Chapter 74, statutes of 2021.  No separate provisions have been made for the cost of providing the mandated intensive business start-up training to prospective new business owners.  As currently envisioned, funding for the "intensive start-up training" would come from the Small Business Technical Assistance Expansion Program.  The Legislature has twice amended the new program to address outreach and administrative costs.  The final remaining issue is the source of funding for the intensive start-up training.

Small Business Retention Program:  The current bill provides no additional funding to support local small business retention programs.  Stakeholders, including local chambers of commerce, have expressed support for the state to help maintain and expand local business retention programs.

Commercial Rent Forgiveness:  Recent budget actions have appropriated federal funding for residential rent forgiveness.  Both small businesses and commercial property owners have expressed concern that, without some sort of intervention, small businesses will not be able to make up over a year of back rent.  Indebtedness related to back rent could become a significant driver of small business bankruptcy. 

Other issues will be added from testimony at the August 18 hearing.

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