Governor, Legislative Leaders Agree on Relief for Californians Experiencing Hardship During Pandemic
Governor Gavin Newsom, Senate President pro Tempore Toni G. Atkins, and Assembly Speaker Anthony Rendon announced they reached an agreement on a package of immediate actions that will expedite additional relief to individuals, families, and businesses suffering the most significant economic hardship from the COVID-19 Recession.
The agreement was part of the Governor’s state budget proposal to provide cash relief to lower-income Californians, increase aid to small businesses, and provide license renewal fee waivers to businesses impacted by the pandemic. The agreement also provides tax relief for businesses, commits additional resources for critical child care services, and funds emergency financial aid for community college students.
Separately, the Governor and legislative leaders said that discussions are continuing on measures for the safe reopening of the state’s K-12 schools, including strategies to address learning loss caused by the pandemic.
Below are key provisions of the Immediate Action Agreement:
Direct Relief to Individuals and Families
The agreement incorporates the Governor’s Golden State Stimulus plan to assist California households with incomes below $30,000, as well as those excluded from previous federal stimulus payments.
The agreement provides $600 in one-time relief to households receiving the California EITC for 2020. In addition, the agreement provides a $600 one-time payment to taxpayers with Individual Tax Identification Numbers (ITINs), largely undocumented individuals and their dependents, who were precluded from receiving the $1,200 per person federal payments issues last spring and the more recent $600 federal payments. The agreement would provide the $600 payments to households with ITINs and income below $75,000. ITIN taxpayers who also qualify for the California EITC would receive a total of $1,200. The payments will be provided to these households shortly after they file their 2020 tax returns.
In addition to those mentioned above, lower-income Californians will also receive assistance through a $600 one-time grant to households enrolled in the CalWORKS program and recipients of SSI/SSP and Cash Assistance Program for Immigrants (CAPI). Grant payments for CalWORKS households are expected by mid-April; timing for the delivery of SSI/SSP and CAPI grants is currently under discussion with federal officials.
Immediate Relief for Small Businesses
The agreement reflects a four-fold increase – from $500 million to more than $2 billion – for grants up to $25,000 for small businesses impacted by the pandemic, and also allocates $50 million for cultural institutions.
The agreement also partially conforms California tax law to new federal tax treatment for loans provided through the Paycheck Protection Plan, allowing companies to deduct up to $150,000 in expenses covered by the PPP loan. All businesses that took out loans of $150,000 or less would be able to maximize their deduction for state purposes. Larger firms that took out higher loans would still be subject to the same ceiling of $150,000 in deductibility. Records show that more than 750,000 PPP loans were taken out by California small businesses.
This tax treatment would also extend to the Economic Injury Disaster Loans.
Fee Waivers for Most Impacted Licensees
The agreement provides for two years of fee relief, which can range from $455 to $1,235 annually, for roughly 59,000 restaurants and bars licensed through the state’s Department of Alcoholic Beverage Control. More than 600,000 barbering and cosmetology individuals and businesses licensed through the Department of Consumer Affairs will also receive relief.
More Resources for Critical Child Care
The agreement adds over $400 million in new federal funds to provide stipends of $525 per enrolled child in state-subsidized child care and preschool providers. Approximately 400,000 children are in subsidized care statewide. The new federal resources will extend care for children of essential workers through June 2022 and will increase access to subsidized child care for more than 8,000 children of essential workers and at-risk children through June 2022.
Additional Aid for Individuals and Families
The agreement provides $24 million for financial assistance and services through Housing for the Harvest for agricultural workers who have to quarantine due to COVID-19. The agreement also provides a combined $35 million for food banks and diapers.
Emergency Financial Relief to Support Community College Students
The agreement provides an additional $100 million in emergency financial aid for qualifying low-income students carrying six or more units, with award amounts to be determined locally and made available by early April. The agreement also provides $20 million to reengage students who have either left their community college studies because of the pandemic or to engage students at risk of leaving.
CalFresh Student Outreach and Application Assistance
The agreement provides roughly $6 million to support outreach and application assistance to University of California, California State University, and California Community College students made newly eligible for CalFresh – the state-administered federal program for supplemental food assistance. The agreement also provides $12 million in state funds to support associated county administrative workload.
Restoration of Reductions
The agreement restores previously enacted funding reductions, effective July 1st, for the University of California, California State University, the Judicial Branch, Child Support Services, and for moderate-income housing.
Bryant Government Affairs
February 2021 Legislative Update