California Gov. Gavin Newsom (D) has approved a $7.6 billion stimulus package that includes checks for low-income residents, fee waivers for restaurants and bars, and grants for small businesses.
However, the bills signed by Newsom February 23 did not include a measure that would partially conform the state to federal law allowing deductions of expenses paid for with forgiven Paycheck Protection Program loans. That bill is still moving through the State Legislature.
In his fiscal 2022 budget, released in January, Newsom proposed stimulus checks and additional funding for COVID-19 relief grants for small businesses, marking them and other economic stimulus proposals as urgent items for lawmakers to act on. Versions of those proposals were incorporated into the final stimulus package, which was fast-tracked for approval by lawmakers February 17 after Newsom and legislative leadership reached an agreement.
One of the bills, S.B. 88, provides $600 stimulus checks to households eligible for the California earned income tax credit for 2020, including those with individual taxpayer identification numbers, many of whom are undocumented immigrants. ITIN households that were excluded from recent federal stimulus payments and have less than $75,000 in income would also be eligible for a $600 payment, according to a release by Newsom’s office, such that “ITIN taxpayers who also qualify for the California EITC would receive a total of $1,200” after filing their 2020 taxes.
Payments of $600 will also go to other low-income residents, including households enrolled in the state’s CalWORKS program and recipients of the Supplemental Security Income/State Supplementary Payment or the Cash Assistance Program for Immigrants. All told, some 5.7 million payments to lower earners will be made through the package.
S.B. 87 provides “$2.1 billion — a four-fold increase over the $500 million currently being distributed — for grants up to $25,000 for small businesses impacted by the pandemic and allocates $50 million of this total for non-profit cultural institutions,” according to Newsom’s office. The legislation would also exclude the grants from being taxed as part of businesses’ income in the state.
The package also includes S.B. 94, which will provide license renewal fee waivers for two years for some 59,000 restaurants and bars, worth between $455 to $1,235 per business. Fee relief will also be provided to individuals and businesses involved in cosmetology and barbering, which, along with food service businesses, have been disproportionately harmed by COVID-19 lockdowns.
The package also provides other forms of aid to families and students.
Notably absent from the approved bills was A.B. 80, which would allow businesses that received PPP loans to deduct up to $150,000 in expenses paid for with forgiven PPP loan dollars, partly conforming with federal law enacted in December 2020. The measure was included in the larger stimulus package agreement announced February 17, but as of press time had not been approved by the Legislature.
In an announcement praising the approval of the stimulus package, the California Chamber of Commerce urged swift action on A.B. 80.
“CalChamber applauds Governor Gavin Newsom for taking action today that offers some much-needed economic relief for California’s small businesses,” according to a statement by the chamber. However, it noted that “while the Governor’s action today is an important step forward, our small businesses still need tax and regulatory relief. The Legislature should act swiftly to pass AB 80, which offers preferable tax treatment for Paycheck Protection Program (PPP) loans.”