Governor Newsom’s Budget Secures Critical Investments that Support Small Business Recovery

“We are glad Governor Newsom has signed a budget that will provide California small businesses with the targeted relief they need in the areas of healthcare, childcare, and business assistance, among others.

We support the governor’s efforts to prioritize a budget that will create equity and help entrepreneurs thrive. The agreement includes investments in several policy areas that will help build a strong foundation of relief for California’s small business owners on their road to recovery from the pandemic. Some key investments aimed at helping small businesses and the acceleration of California’s economic recovery include:

• $304 million to bolster premium assistance for health coverage for middle-income Californians, which will benefit entrepreneurs and small business employees struggling to afford coverage.
• $23 million to increase and provide ongoing funding toward the Technical Assistance Expansion Program (TAEP) for small businesses.
• $3 million in ongoing funding for the Capital Infusion Program that supports small business assistance providers.
• Expanding Medi-Cal to all eligible Californians regardless of immigration status, strengthening the healthcare system in California.
• Providing tax conformity for those who received Paycheck Protection Program (PPP) loans, allowing all federal PPP loans to be excluded from the definition of income.

We are also glad that the budget includes investments in childcare that will support small childcare providers and those in the small business ecosystem struggling to access affordable care. These investments include more than $100 million towards renovating and repairing childcare facilities in childcare deserts and low-income communities, reimbursing provider rates for one year, and helping small childcare business owners access capital. Additionally, the governor has proposed $136 million toward waiving family fees for childcare. With this agreement, the governor is taking steps to create opportunities for the childcare industry to thrive by investing in programs for self-employed business owners, microbusinesses, and small business employees.

Despite these positive provisions, we are disappointed that the final budget did not include a proposal to provide grant relief for small businesses in hard-hit industries. Although resilient, smaller firms continue to grapple with disruptions to their business operations, which has led to financial insecurities. The Hard-Hit Industries Grant Program would stimulate recovery for the top 10 industries hardest hit by the pandemic, including the many small businesses that are slow to recover. We are also disappointed that a proposal to increase wage replacement through the Paid Family Leave (PFL) program was not included in the budget. The PFL and State Disability Insurance programs are paid entirely through employee contributions, but many in the small business ecosystem cannot participate because the current wage replacement rate (maximum 70%) is inadequate.

We are pleased that Governor Newsom has signed the budget and taken steps to advance critical investments in the resources small businesses need. We urge him to quickly sign trailer bill language that addresses additional needs for small business, including grant relief for hard-hit industries and expanded wage replacement through PFL so that more small businesses and their employees are able to participate.”

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