Newsom’s Budget Offers Tax Breaks to Businesses, Job Training to Spur California Economy
Monday, January 11, 2021
Californians struggling to get back to work during the coronavirus pandemic could get help from more than a billion dollars earmarked for job creation and workforce training in Gov. Gavin Newsom’s new budget proposal.
If approved, more than $750 million would go toward a so-called California Jobs Initiative that would provide a combination of tax credits, micro-grants, and loans aimed at boosting job creation.
Newsom is also proposing $353 million for job training and apprenticeship programs, in sectors ranging from construction to cybersecurity.
The money would come on top of $575 million in grants Newsom is asking the Legislature to be distributed immediately to small businesses to help them through the pandemic.
The money comes as the state’s unemployment rate stands at 8.2%, lower than at the peak of the pandemic but higher than any other time since late 2013. California has lost more than 1.4 million jobs since February.
“We’re not giving up on the economic development,” Newsom said at the press conference where he rolled out the proposal. “We’re not rolling over, giving up in terms of our dominance, in terms of our startup, innovation, entrepreneurialism, and world-class headquartered companies.”
TAX CREDITS FOR BUSINESS
The centerpiece of Newsom’s proposal is boosting the California Competes Tax Credit, known as CalCompetes, by $430 million.
The program since 2014 has given $180 million per year in tax credits for businesses based on creating and retaining jobs. The proposal would increase the amount of tax credit available by $90 million to $270 million for fiscal years 2020-21 and 2021-22.
Another $250 million proposal would establish a grant, aimed at businesses that either establish at least 500 net new jobs, make a significant infrastructure investment, commit to a high-need area of the state, or are strategic priority of the state. At least $50 million of the $250 million will be dedicated to “high-need, high-opportunity areas of the state,” such as areas with higher unemployment or poverty rates, according to the proposal.
The proposal also includes $100 million to expand the state’s Main Street Small Business Tax Credit, which provides small businesses a $1,000 tax credit for each employee hired since the pandemic hit.
The proposal includes a one-time, $35-million California Dream Fund to support Californians starting their own businesses. The seed funding prioritizes underserved communities hard hit by the pandemic’s economic toll, like immigrants, women, and people of color.
The startup grants will offer micro-loans worth up to $10,000. The grants will be accessible through small business technical assistance centers, according to the proposal, as early as this year.
“These are important grants for people who have truly fallen through all the cracks and this is a real lifeline for many many businesses,” Newsom said. “A few thousand bucks, a few hundred bucks could be the difference between keeping those lights on or turning them off permanently.”
The National Federation of Independent Business, an advocacy organization representing small businesses, praised Newsom’s proposal, saying more grant dollars will help small businesses that have exhausted money from the Paycheck Protection Program given by the federal government last year.
“Expanding the Main Street Hiring Tax Credit will help our small employers to recruit and retain workers and get people back on the job with paychecks so they can feed their families,” NFIB California State Director John Kabateck said in the statement.
JOB TRAINING, APPRENTICESHIPS
Newsom’s proposal also includes $353 million for workforce development, $250 million of which will support proposals improving connections between colleges and universities and employers.
“We have to do better in this space,” he said. “We gotta connect what’s really happening in our workforce to what we are educating in terms of our human capital.”
Of the rest of the $353 million, $25 million will support over 2,000 new apprenticeships, including 650 jobs in construction, 200 jobs in cybersecurity, and hundreds of jobs in forestry and agriculture, healthcare, and logistics.
$20 million will go to expand work-based learning programs at community colleges. Another $20 million will go toward giving stipends for students in University of California’s science and innovation institutes as well as linking those programs with workforce needs.
Additionally, the proposal includes $407 million in federal funding for job training, of which 15% will be appropriated by the state to fund workforce programs for veterans, English-language learners, and people living with disabilities.
The state is also proposing $500 million to build infrastructure for new homes and create jobs, as well as $1 billion for electric vehicle charging and hydrogen fueling stations.
Category: Economic News, COVID-19, Small Business Relief