Small Business Proposals in the State 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.  It is estimated that since mid-March 2020, over 19,000 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 Budget for FY 2021-22 

The 2021-22 state budget is an expenditure plan of $264.1 billion with $195.5 billion in General Fund expenditures, including significant investments to help catalyze an equitable, inclusive, and broad-based economic recovery.  This budget reflects a $75 billion estimated budget surplus (revenues above prior year estimates).   

Due to COVID-19 and the unprecedented budget surplus, the approval of the 2021-22 budget is an ongoing process.  According to the Assembly Budget Committee's July 16, 2021, Assembly Floor Report, "The Assembly Budget Committee anticipates further budget action at the end of the 2021 legislative calendar, and will again update this report at the time."

Below is a selected summary of previously approved budget appropriations related to grants, programs, and services intended to support an inclusive recovery of California small businesses. 

  • Grants:

    • Golden State Stimulus 2:  $8.1 billion in tax cuts to Californians with income of up to $75,000.  This will provide taxpayers with payments of $500, $600, $1,000, or $1,100, depending on their filing status.  Combined with early action tax relief for families and businesses, this totals approximately $14.7 billion in tax relief. 

    • Small Business and Nonprofits Grants:  $1.5 billion for small business and nonprofit grants, bringing the total investment in the Small Business COVID-19 Relief Grant Program to $4 billion.

    • Grants to Microbusinesses:  $50 million one-time GF for grants to local governments and nonprofits to provide direct relief to eligible microbusinesses.

    • Grants to Independent Venues:  $150 million one-time GF for CalOSBA to provide financial relief to independent venues, live events businesses, and minor league sports.

    • Grants to Performing Arts:  $50 million one-time GF for GO-Biz to provide grants under the California Nonprofit Performing Arts Grant Program.

    • Grants for Business Expansion:  $120 million one-time GF for GO-Biz to provide grants to businesses that create more than 500 jobs, are located within targeted census tracks, or make significant new capital investments of at least $10 million.  This grant is a new component of the California Competes Tax Credit Program, and it includes a claw back provision should grant conditions not be met by the grantee.   

  • Infrastructure

    • Broadband:  $6 billion over 3-year period ($4.3 billionin budget year) for broadband infrastructure and improved access to broadband services throughout the state.  Details will continue to be worked out through three-party negotiations. Administrative flexibilities will enable the appropriated funds to be accelerated to ensure they are available as needed to fund the expansion and improvements.

    • Port Infrastructure:  $250 million one-time federal ARPA funds to GO-Biz to allocate to California ports to address some of the revenue impacts suffered by ports as a result of COVID-19.

  • Small Business Technical Assistance

    • Small Business Technical Assistance Expansion Program:  $17 million GF (third year of a five-year agreement) to provide funding for technical assistance to small businesses.  Program changes made through the adoption of a budget trailer bill  expanded the definition of an eligible applicant from federal technical assistance providers, such as the federal Small Business Development Centers (SBDCs), Women's Business Development Centers, Minority Business Development Centers, Procurement Technical Assistance Centers, Veteran Business Outreach Centers, and Manufacturing Assistance Center, to include any nonprofit in the state that offers small business services.  No related budget augmentation was made when increasing the pool of eligible applicants. 

    • California Dream Fund Program:  $35 million one-time GF to support microgrants of up to $10,000 to seed business start-ups by entrepreneurs from underserved small business groups who participate in intensive business start-up training programs.  Up to 10% of funds can be used for administrative costs (maximum 5%) and outreach and marketing (maximum 5%).  Funding for the intensive business start-up training for pre-revenue prospective business owners will be funded from the Small Business Technical Assistance Expansion Program. 

    • Entrepreneur Seed Grants:  $20 million one-time GF to the California Workforce Development Board for a second round of funding for the Social Entrepreneurs for Economic Development program.  This program will provide seed grants to business start-ups who complete intensive business start-up programs.  

    • Capital Infusion Program:  $3 million GF (third year of a five-year agreement) for technical assistance and services provided by SBDCs to small businesses seeking new capital.

    • Inclusive Innovation Hub:  $2.5 million one-time GF to relaunch the California Innovation Hub program as the Inclusive Innovation Hub program (iHub2) to incentivize a focus on diversity, equity, and inclusion in the state’s tech and science-based start-up ecosystem.

    • Jump Start Tourism:  $95 million one-time federal ARPA funds to the Office of Tourism to implement strategic media recovery campaigns that will jump-start the recovery of the travel and tourism industry once it is safe to travel.

  • Tax Credits

    • Main Street Tax Credit:  $100 million for the Main Street Small Business Tax Credit to provide a second round of reservations in 2021-22.  This would also include $47 million in unauthorized credits from the first round.  SB 1447 (Bradford, Caballero, Cervantes), Chapter 41, Statutes of 2020.  

    • Hire Homeless Tax Credit:  The amount of Homeless Tax Credit is based on how many hours are worked by that eligible individual and varies between $2,500 and $10,000 per eligible individual (maximum $30,000 per taxpayer).

    • California Competes Tax Credit:  Increases the amount of credits allocated in fiscal year 2021-22 from $180 million to $290 million for the California Competes Tax Credit program.

    • Film Tax Credit:  $95 million, including $75 million recurring, to expand the California Film and Television Tax Credit Program 3.0 productions that relocate from other jurisdictions.

  • Small Business Finance

    • Small Business Loan Guarantee Program:  $20 million one-time GF to recapitalize the Small Business Loan Guarantee Program.

    • Small Business Finance Center:  $50 million one-time GF for the Small Business Finance Center to provide financial assistance to small businesses through any IBank program, including the California Rebuilding Fund, with a focus on programs that benefit underserved businesses in California.   

  • Workforce Preparation

    • Training of Incumbent and New Workers:  $50 million one-time GF to the Employment Training Panel to expand its programs into high-demand sectors.  

    • Coordination of Training of New Workers:  $15 million one-time GF to Employment Training Panel to align and operate programs with the community college system, in partnership with the California Community Colleges Strong Workforce Program.  The release of the funding announcement is pending, but early reviews suggest the funding will be limited to the training of new employees in high road industries.

    • Regional Recovery Partnerships:  $25 million one-time GF to the California Workforce Development Board to fund Regional Equity and Recovery Partnerships between local workforce boards and community colleges.

    • Funding to the California Workforce Development Board for High Road Training Strategies:

      • $100 million one-time GF to make additional High Road Training Partnership grants.   

      • $25 million one-time GF to establish High Road Training Partnerships aligned with the California Community Colleges.

    • Golden State Education and Training Grant Program:  Creates a grant program, which provides education grants of up to $2,500 for workers displaced by COVID-19.  Grant recipients can use the funding to cover costs for higher education or other training programs.

    • Training for System Impacted Workers:  $20 million one-time GF for the Prison to Employment program.

    • AB 1111:  $30 million one-time GF for the Breaking Barriers to Employment Program with $5 million earmarked for programs that serve individuals with autism.

    • Nurse Training:  $14.5 million one-time GF for workforce programs for certified nurse assistants.  (Community Colleges will administer these programs.)

    • Targeted Training to Redress Underinvestment:  $3.5 million one-time GF for Southern California Association of Governments for workforce development and training to redress income inequality within targeted populations.

 

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