Newsom Unveils Economic Recovery Plan as Covid Ravages Golden State

Gov. Gavin Newsom wears a protective mask on his face while speaking to reporters at Miss Ollie’s restaurant during the coronavirus outbreak in Oakland, Calif. on June 9, 2020. (AP Photo/Jeff Chiu, Pool)

(CN) — Aiming to boost an economy ravaged by the Covid-19 pandemic, California Governor Gavin Newsom introduced a package of budget proposals Tuesday intended to help small business and revitalize jobs.

The governor proposed adding $575 million in small business grants on top of $500 million already planned for the program in fiscal year 2021-22, which starts July 1. Newsom also wants to allocate $500 million for jobs and long-term housing development, $353 million for workforce development, $300 million for deferred maintenance and $1.5 billion for clean-energy transportation.

“These budget proposals reflect our commitment to an equitable, broad-based recovery that ensures California remains the best place to start and grow a business — and where all Californians have an opportunity to reach their dreams,” Newsom said in a statement Tuesday.

Before the pandemic shut down large swaths of the state’s economy this past March, small business created two-thirds of new jobs in California and employed nearly half of its private-sector employees, according to the governor’s office.

With a $575 million boost, the state’s Small Business Covid-19 Relief Grant Program would offer more than $1 billion in grants to companies and nonprofits with $2.5 million or less in annual gross revenue. Each eligible business can receive up to $25,000 through the program.

The grants will be distributed across the state but prioritized for regions and industries most harmed by the pandemic and underserved communities, according to the governor’s office. The program will also reserve $25 million for small cultural institutions.

Newsom proposes a $777.5 million infusion for the California Jobs Initiative, which is focused on job creation and retention. The program includes tax incentives to entice businesses to relocate and stay in California and to hire workers in-state. The allocation covers small business loans and sales tax exclusions to make manufacturing equipment more affordable, and includes another $35 million fund to help entrepreneurs start businesses.

The governor also plans to put $70.6 million into a fee-waiver program for barbers, cosmetologists, restaurants, bars and other businesses and workers impacted by the public health crisis.

“These waivers will assist those who have not been able to operate or are operating at reduced capacity during the pandemic,” the governor’s office said in a statement.

Newsom proposed another $300 million for deferred maintenance and state infrastructure, including the installation of electric vehicle charging stations at state-owned facilities. The money will help create jobs while achieving the state’s climate goals.

The governor seeks to inject an additional $500 million into the Infill Infrastructure Grant Program, which aims to create more than 7,500 new affordable housing units and cut costs for new housing construction by defraying expenses for things like sewers, roads and site preparation.

The largest proposal in the package is a $1.5 billion infusion for clean-energy transportation, including the purchase of clean trucks, buses and off-road freight equipment. The money would also help construct electric charging and hydrogen fueling stations to make driving zero-emissions vehicles more convenient for Californians.

Last month, California Assembly Budget Committee Chair Phil Ting rolled out his own blueprint for the state’s 2021-2022 budget. It called for reversing cuts to higher education and continuing investments in pandemic response, economic recovery and homelessness services and prevention.

Ting said the state is in a position to reverse some budget cuts after revenue came in at $26 billion more than projected in the third quarter, but deficits are still expected in the coming years.

“This is a time when people need their government the most,” Ting said in a statement on Dec. 10. “Until we have widespread vaccination rates, we will need to keep helping families and small businesses and provide a path to economic recovery.”

In a statement Tuesday, the leaders of California’s two legislative bodies said they will partner with the governor to pass a budget that will help the state weather the ongoing pandemic fallout.

“Californians are hurting and need immediate assistance to weather the current crisis. A unified effort is critical to success and we look forward to working with the Governor on the specifics of his, and legislative, proposals to take early action in providing meaningful additional relief,” Senate President pro Tempore Toni G. Atkins, D-San Diego, and Assembly Speaker Anthony Rendon, D-Lakewood, said in a joint statement.

The governor will release his full budget proposal Friday.

On Tuesday, the state reported 31,440 new cases of Covid-19 and 368 deaths, bringing the total number of cases to 2.4 million and total deaths to 27,020. The Covid-19 death rate in California has increased 38% over the last two weeks.

More than 22,400 Covid-19 patients were hospitalized as of Tuesday, a 27% increase over two weeks. 

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