Governor Newsom’s Budget Package Maintains Support for Key Small Business Programs Despite Budget Shortfall

“We are glad Governor Gavin Newsom has advanced a streamlined 2023-24 state budget and additional bills to improve access to affordable healthcare, create workforce equity and support small business assistance programs. 

Despite the administration’s uphill battle to close a $31.5 billion spending gap, the budget package included investments in several policy areas to help build a robust foundation of resources California’s small business owners need to grow. Some of the key investments that we support aimed at helping small businesses and the acceleration of California’s economic recovery include:

• Returning funds to the Health Care Affordability Reserve Fund (HCARF) - Rising healthcare costs remain an issue for California’s small business owners who struggle to provide healthcare benefits for their employees and access it themselves. We support the decision to return full funding to the HCARF reserve and help to maintain affordable healthcare for the 1 million people enrolled in Covered California. 
• Increasing Medi-Cal provider rates - Medi-Cal is a proven program that supports low-income Californians, many of whom own or work for small businesses. We are glad the budget package included funding that will help the program address current inequities and support recent expansions to the program, including providing access for undocumented Californians. 
• Continuing funding for technical assistance - Technical assistance is particularly important to entrepreneurs of color who have historically seen fewer investments in their communities than their white counterparts. We are glad that the budget includes continued funding for the Technical Assistance Program Office to provide technical assistance to small businesses, including businesses owned by socially and economically disadvantaged individuals.
• Supporting reproductive healthcare services - Our research found that 72% of women small business owners support a federal law that ensures women have the right to reproductive healthcare. Small business owners note that access to family planning and related services plays an important role in career success. We support allocated funding that provides access to comprehensive family planning for Californians as the nation navigates its next steps on this issue.

In addition to lauding the investments in small business programs included in the budget, there are some missed opportunities to further support our state’s entrepreneurs and small employers. As the California Legislature considers updating the state’s small business paid family leave and sick day policies, our research shows that small business owners strongly support expanding family leave protections and other employee benefits. We encourage the governor to invest in a proposal to increase the wage replacement to 90% of wages, allowing more small businesses and their employees to participate in the state’s Paid Family Leave program. Additionally, we are disappointed in the following:

• Failing to include tax reforms proposed by Senate Democrats in April that would enact meaningful tax cuts and reinvest critical dollars back into our state's small businesses.
• A decrease of $50 million in General Fund from IBank’s Small Business Finance Center and the California Rebuilding Fund, leaving less funding available to help small businesses expand. 
• Rejecting a program to create unemployment benefits for undocumented workers, denies this community access to critical resources that would enable them to spend at local small businesses. 

We are pleased that Governor Newsom has signed the budget package and taken steps to advance critical investments in the resources small businesses need. We encourage continued efforts throughout the remainder of this legislative session that will prioritize essential resources to create equity and help entrepreneurs thrive.” 

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