On Monday, February 22, 2021, the California State Legislature passed key elements of a $9.6 billion pandemic assistance plan proposed by Governor Gavin Newsom, Senate President Pro Tempore Toni G. Atkins and Assembly Speaker Anthony Rendon.
Governor Newsom is expected to sign the approved measures into law on Tuesday, February 23, providing for an estimated:
- $2.3 billion in one-time payments to tax filers earning less than $30,000 in 2020
- $2.1 billion in grants and fee waivers for small businesses
- $1 billion in one-time payments to beneficiaries of certain state and federal income support programs
- $500 million in one-time payments to tax filers who earned $75,000 or less in 2020 and who were not eligible for a federal stimulus check in 2020
The legislature is expected to approve an additional $2 billion in tax breaks for businesses later in the week.
Unexpected Budget Surplus Pays for the Plan
Governor Newsom has suggested the new package is being funded from much higher than anticipated state tax revenues in 2020. California’s economy outperformed expectations despite the pandemic, and state budget experts project a budget surplus of $15 billion or more for the 2020–2021 fiscal year.
‘Golden State Stimulus’ Payments
The plan provides $2.3 billion for one-time “Golden State Stimulus” payments to an estimated 5.7 million low-income tax filers. These include:
- $600 payments to an estimated 3.8 million filers who qualified for the Earned Income Tax Credit in 2020 (i.e., those earning less than $30,000)
- $1,200 payments to an additional 565,000 filers whose income is below $75,000 and who did not receive a federal stimulus payment (many of whom may be in the state without legal documentation but work and pay taxes)
- $600 payments to an estimated 1.2 million individuals who receive federal supplemental security income or support from state supplementary assistance programs
- $600 payments to an estimated 400,000 participants in California’s welfare-to-work program, CalWORKS.
CA Small Business COVID-19 Relief Grants
The plan includes $2.1 billion to establish and fund the California Small Business COVID-19 Relief Grant Program within the state’s Office of the Small Business Advocate.
The new program will offer competitive grants of $5,000–$25,000 to small businesses—businesses with gross revenues of up to $2.5 million—meeting a variety of criteria, including geographic distribution based on COVID-19 restrictions, industry sectors most impacted by the pandemic and underserved small businesses.
Additional Business Relief Pending
The legislature is expected to approve an additional $2 billion as part of the plan later this week. The additional funding is to cover, among other things, the cost of:
- Permitting the roughly 750,000 California companies that took out federal Paycheck Protection Plan (PPP) loans to deduct up to $150,000 in expenses covered by a PPP loan from their state taxes
- Waiving license renewal fees for an estimated 59,000 of the restaurants and bars licensed through the state in 2020
- Waiving licensing fees for the more than 550,000 licensed barbers and cosmetologists in the state
- Wraparound services and financial assistance for agriculture workers to provide COVID-19 quarantine support
- Approximately $50 million in grants to cultural institutions that have suffered financially as a result of the pandemic