GRANTS
New programs
$500 million one-time General Fund in 2022-23 for the California Small Business Hard-Hit Industries Grant Program administered by the Office of the Small Business Advocate (CalOSBA), within GO-Biz, to provide additional relief to those small businesses most affected by the pandemic. This program will focus on economic recovery to accelerate job growth, promote equity and inclusivity, and establish sustained post-recovery growth for the top ten industries hardest hit by the pandemic. Eligible small businesses and nonprofit organizations can receive grants ranging from $10,000 to $50,000, depending on their annual gross revenue.
Unnamed grant that will be administered by the California Energy Commission that will provide grants to businesses headquartered in California that help the state research technologies that help CA achieve its climate goals. This grant would be $1billion over the next 4 fiscal years. This year would be $100 million. The next 3 fiscal years would be over $300 million.
$75 million one-time General Fund in 2022-23 for the California Small Agricultural Business Drought Relief Grant Program to provide direct assistance to eligible agriculture-related businesses that have been affected by severe drought conditions. Grant awards range from $30,000 to $50,000, depending on annual gross revenue decline, and will be prioritized first to businesses located in regions hardest hit by drought impacts, including the Sacramento-San Joaquin Valley, and then to additional areas experiencing drought impacts, as determined by the California Department of Food and Agriculture. This program will be administered by CalOSBA, in consultation with the California Department of Food and Agriculture, and will be modeled after other CalOSBA programs providing relief to small businesses.
Additions to existing programs
$150 million for one-time addition to the COVID-19 Small Business Grant passed in an early action budget in February.
$120 million for CalCompetes Grant. Extension of Cal Competes Tax Credit and Grants, but the committee that decides the grant is still expected to be dissolved in 2022-23. Grants are given to businesses that wouldn’t benefit from the nonrefundable tax credit.
TAX RELIEF
There are $8 billion in PPP loans in CA that are not under federal conformity because the state didn’t write the law for that. To ensure that businesses do not have to pay for the state taxes related to conformity. The May Revision includes $450 million in budget drawdown over the next 5 fiscal years to exclude PPP funds from state taxes.
The May Revisions includes $180 million for CalCompetex Tax Credit, but the Governor’s office is asking the Legislature to extend the tax credit program until 2027-2028.
The May Revision is asking that the businesses that were eligible for the Main Streets 1 and 2 tax credits to be given 5 years to claim those tax credits.
Businesses that received Restaurant Revitalization Funds or Venue Operator Grants are exempt from state income tax and allow normal deductibility for the expenses related to the grants which amounts to about $144 million in business owners’ pockets. This passed in an early action budget in February.
Indirect Small Business Assistance
This proposal would provide a one-time refund of $400 to each eligible owner of a registered vehicle. The proposal caps the number of rebates to two per registered vehicle owner for a total of $800, excludes fleets and corporate-owned vehicles, and excludes vehicles over a certain value.
To provide relief to millions of Californians who ride transit and rail, the broad-based relief package includes $750 million in incentive grants to transit and rail agencies to provide free transit for Californians for three months. This proposal will provide an amount to agencies based on their 2019 fare revenues.
The broad-based relief package also includes a 12-month pause, effective October 1, 2022, on the General Fund (3.9375-percent rate) portion of the sales tax rate on diesel fuel. This pause will provide relief to the commercial sector that utilizes the bulk of diesel fuel in the state. This pause is estimated to reduce revenues by $327 million in 2022-23 and $112 million in 2023-24. Revenue from this portion of the diesel fuel tax is generally dedicated to the Public Transportation Account (PTA).
The May Revision includes $136 million one-time federal funds for the California Department of Social Services and $21.3 million one-time General Fund ($10.8 million Proposition 98 General Fund, $10.5 million non-Proposition 98 General Fund) for the California Department of Education to waive family fees for state-subsidized preschool and childcare and development services from July 1, 2022 through June 30, 2023.