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The May Revision to the California 2020-21 Budget

CA state capitol.png
CA state capitol.png

The May Revision to the California 2020-21 budget was released on May 14, 2020 and to no one’s surprise, painted a stark picture of the impact COVID-19 has and will continue to have on the residents of CA.  With the estimate of a two-year budget deficit in the amount of $54.3 billion, the May revision lays out the state’s budget plan, balancing a mix of cuts and strategic focus to move the state down the road to economic recovery.

In the area of economic development, the May revision identifies a number of ways in which the state is aiming to support the rehabilitation of existing businesses and the state’s workforce while encouraging further growth.  In response to the impact COVID-19 has had on the state’s economic stability, the May revision identifies elements that will be key to rebuilding and emerging stronger than before.  Some of these elements include:

  • Augmented Small Business Loan Guarantee Program at the California Infrastructure and Economic Development Bank (IBank) by $50 million, for a total program increase of $100 million since the pandemic began.

  • Maintains proposal to waive $800 minimum franchise tax for new businesses for the first year of business creation.

  • Prioritizes consolidation of CA Workforce Development Board, Employment Training Panel, Workforce Service Branch, Labor Market Information Division, and Division of Apprenticeship Standards into “Department of Better Jobs and Higher Wages” to better streamline Workforce Development and training services.

  • Features new Task Force on Business and Jobs Recovery, which will make recommendations and advise the state on economic recovery efforts.

  • Maintains the proposal to fund four positions within the Governor’s Office of Business and Economic Development (GO-Biz) to support efforts in bringing business and economic development to Inland and Northern California. 

By leveraging funds with existing state programs and properties, the May revision looks to foster the production of housing while preserving the housing supply we currently have.  Despite having to make cuts in this critical area, the May revision still manages to support housing by continuing to seek strategies to stabilize, streamline, and encourage housing efforts.  Key aspects of the May revision to housing include:

  • $500 million allocated for various public housing agencies to maintain normal operations to maintain low-income units, provide rental assistance and homeless individuals or families.

  • $750 million allocated for Project Roomkey to purchase hotels and motels to address homelessness. Properties will be owned and operated by local governments or non-profit providers.

  • $450 Million allocated for all cities that did not receive a direct allocation from the Federal government. Of these recipients, cities with populations above 300,000 will receive a direct state allocation while all other cities will be provided funding through their counties. Funding is to address the impacts of COVID-19 on people experiencing homelessness, including but not limited to outreach and hygiene efforts, shelter and housing supports, public safety, and rental subsidies.  It should be noted that this funding will only cover COVID-19 related expenses incurred between March 1, 2020 and December 30, 2020. 

  • $331 million allocated for National Mortgage Settlement funds for housing counseling, mortgage assistance and renter legal aid services. The California Housing Financing Agency will administer $300 million for housing counseling and mortgage assistance and the remaining $31 million to the Judicial Council to provide grants to legal aid services organizations.

  • Several cuts will be made to existing sources of affordable housing funding including $250 million to mixed-income development funds over the next three years, $200 million in infill infrastructure grant funds, and $115 million in other program housing funds.

The May Revision to the California 2020-21 Budget can be read in its entirety here.  If you have any questions or concerns on how the May revisions might impact your jurisdiction, we encourage you to reach out to our team today.  From assisting you with ideas on how to best spend your jurisdiction’s portion of the additional $450M in CARES act funding, to identifying housing resources that will best fit the needs of your City, our highly skilled team of consultants are here to help.  Give us a call at (714) 541-4585 or reach out via email to [email protected].