Despite Budget Deficit, California Hopes to Spend $600M More

Lawmakers want to increase the budget by adding tax credits for immigrants, increasing COVID-19 outreach and encouraging businesses to hire workers while facing a projected $8.7 billion deficit for next year.

(TNS) — Despite a looming budget deficit, lawmakers on the final day of their legislative session sent California Gov. Gavin Newsom proposals to add more than $600 million in spending and reduce some revenue with tax breaks.

Bills to expand tax credits for immigrants, add money for COVID-19 outreach and give tax breaks to businesses that hire more people are among those lawmakers passed Monday.

The proposals build on the $202 billion budget lawmakers and Newsom enacted in June, for which they had to cut spending to make up for a $54 billion shortfall triggered by the coronavirus pandemic and economic downturn.

Since the initial budget passed, the state has collected more in taxes than expected, although budget experts caution that the strong returns reflect pre-recession economic activity in 2019 taxes. Tax revenue for the 2019-20 fiscal year, which ended in June, came in more than $1 billion higher than projected, according to the California Department of Finance. Revenue from July came in $2.5 billion higher than forecast.

The Department of Finance still projects the state faces an $8.7 billion deficit next year.

Here’s a look at some of the costly proposals awaiting Newsom’s action:

Tax Credits For Immigrants

One of the bills passed Monday would extend access to the state’s earned income tax credit for low-income working families to more immigrants, including many living in the country illegally. It allows people to file for the credit using Individual Taxpayer Identification Numbers, which are given to people who do not qualify for Social Security Numbers.

It would build on an expansion passed through the budget in June, which allows immigrant filers with children under 6 to claim the credit regardless of immigration status.

Lawmakers estimate that the bill would allow about 200,000 more people to get the credit, said Assemblyman Phil Ting, the San Francisco Democrat who chairs the Assembly’s Budget Committee.

“These are working individuals here in California who, if they are unemployed or have been laid off, cannot access our federal unemployment insurance program,” Ting said Monday on the Assembly floor during debate on the bill. “During this very challenging time of COVID, we wanted to make sure those who are working and adding to the California economy have every right and ability to access one of the most important programs in our state.”

Assemblyman Jay Obernolte of Big Bear Lake, who serves as Ting’s Republican counterpart on the Budget Committee, opposed the expansion because he said it’s harder to verify the identity of people without Social Security Numbers.

The proposal, Assembly Bill 1876, would cost an estimated $60 million annually, according to the nonpartisan Legislative Analyst’s Office.

Hiring Tax Credit

Another proposal would authorize up to $100 million in tax credits for small businesses that hire or rehire employees in the next three months.

Companies with fewer than 100 employees that lost at least half their typical revenue between April and June would be eligible under the proposal, Senate Bill 1447. They’d get $1,000 in credits for each worker hired.

Cal Expo Bailout

Lawmakers also sent Newsom a bill that includes a $6 million bailout for Cal Expo fairgrounds in Sacramento, which have taken a financial hit during COVID-19 even as it is used as a coronavirus testing site.

The funding would help pay for emergency operations at the fairgrounds. In addition to the testing site, the site is also used to house homeless people in trailers during the pandemic and could be used for evacuees as fire season ramps up.

The state would loan Cal Expo half the money and provide the other half in a one-time payment. The bill also includes an option to add $3 million more if needed.

Pandemic Outreach

Senate Bill 115 would allocate money for COVID-19 education outreach. About $32 million would fund pandemic education outreach aimed at slowing spread of the virus in workplaces, and another $30 million would fund outreach to communities disproportionately affected by the coronavirus.

“Long-standing systemic health and social inequities have put our immigrant and communities of color at an increased risk of getting sick and dying of COVID-19,” Assemblyman Joaquin Arambula, D-Fresno, said. “SB 115 allocates funds to invest in community outreach efforts and help protect our essential workers who are the backbone of our state.”

Unemployment For Caregivers

Under another proposal, people paid through state programs to care for their spouse or child with disabilities would be eligible to collect unemployment benefits if the family members they care for die.

The Legislative Analyst’s Office estimates the proposal would cost $28 million annually.

Repeal Court Fees

Another proposal would repeal administrative court fees that Ting argued during floor debate would harm low-income people and people of color.

Obernolte opposed the measure, arguing that many of the fees that would be repealed are already means tested, meaning low-income people already do not pay them.

“I think we can all agree that poverty should not be criminalized,” he said. “However... what we are actually doing is preventing county courts from collecting these fees from people who can pay them.”

The bill would appropriate $50,000 in the current budget year and then $65 million in subsequent years to compensate courts for the lost revenue.

©2020 The Sacramento Bee (Sacramento, Calif.) Distributed by Tribune Content Agency, LLC.