Senate Leaders Unveil Proposed State Budget Approach, Proposal to Aid California’s Economic Recovery
SACRAMENTO – As the California State Senate returns to the Capitol and resumes session this week, Senate President pro Tempore Toni G. Atkins (D-San Diego), along with Senators Holly J. Mitchell (D-Los Angeles), Steven Bradford (D-Gardena), and Robert M. Hertzberg (D-Los Angeles), unveiled the Senate Democratic Caucus’ proposal for the state budget and California’s economic recovery.
The budget approach aims to keep the budget balanced over a multi-year period through pragmatic spending decisions, use of reserves and other traditional solutions, and federal support. Senate Democrats also are proposing two specific recommendations that would aid California in rebounding from the deep economic impacts of the COVID-19 health crisis. As California so often leads the way, our roadmap to a just and equitable recovery can serve as a model for the rest of the nation.
“Our goal is to offer ideas for our state budget and economic recovery that take a responsible approach to planning for our state’s spending, while also keeping in mind the needs of Californians, millions of whom have been adversely impacted by the pandemic,” said Atkins. “This approach protects our state and communities by aiming to avoid major ongoing program cuts and not increasing broad-based taxes for middle-class Californians. We must do all we can to help heal our economy, while ensuring that our solutions do not create further harm.”
“Senator Mitchell will lead the Senate’s budget efforts again this year. Her experience, including leading our Special Budget Subcommittee on COVID-19 Response, will ensure the Senate crafts the best budget possible for the people of California during this crisis,” continued Atkins.
“Although this will be a difficult budget, thanks to this last decade of responsible budgeting, California is better positioned than ever to deal with a fiscal downturn,” said Mitchell. “In crafting the budget in the next few weeks, we must use the reserves that we have built, other available tools, and any additional federal relief that we may receive in an efficient and effective manner that avoids exacerbating both short and long-term problems created by the COVID-19 crisis.”
Senators also made two recommendations aimed at helping Californians and the state’s economic recovery. The proposals result from the ongoing efforts of the Senate Democrats’ Working Group on Economic Recovery.
The first proposal, which focuses on renter and landlord stabilization, would create a program enabling agreements between renters, landlords, and the state to resolve unpaid rents over a limited time period. The program would allow renters to receive immediate relief for unpaid rent and protection from eviction, and repay past rents, without interest, to the state over a 10-year period, beginning in 2024. Landlords would provide rent relief and commitment not to evict tenants in exchange for tax credits from the state equal to the value of the lost rents, spread equally over tax years 2024 through 2033.
“The California Senate is focused on helping those at risk of losing their home during this crisis,” said Bradford. “This is a substantive proposal that protects those who are struggling to afford their rent and also keeps rental properties from going into foreclosure. This equitable strategy will keep people housed. It will also prevent financial ruin for many families by allowing them to keep the assets they have worked so hard to build. That is how we care for the most vulnerable.”
The second proposal would create a $25 billion Economic Recovery Fund through establishment of prepaid future tax vouchers from 2024 through 2033. The funds could be used to create jobs and provide a myriad of services and resources, from small business and worker assistance and retraining to wildfire prevention response and schools most harmed by campus closures.
“Over the past many weeks, our leadership has been working around the clock to develop the kind of economic recovery that works for everyone,” Hertzberg said. “Now is the time to explore more creative ways to help financially stabilize this new era in California, and it’s our cautious optimism and careful planning that’s going to get us there as we all move forward together.”
Budget Approach & Economic Recovery
What Others Are Saying: Senate’s COVID-19 Recovery Proposals
Read below statements of support from various industry groups:
“Workers aren’t working. Rents are due. Families are in crisis. I’m looking forward to working with Pro Tem Atkins to create a safety net for California’s working families.”
State Building and Construction Trades Council of California
“The California Small Business Association, on behalf of our 60 affiliate organizations representing over 200,000 small businesses in California, applauds the Senate Democrats budget approach in response to the unprecedented COVID-19 pandemic and the devastating impacts on our state budget. The loss of life from this crisis is heartbreaking beyond words and the shutdown of our economy necessary to fight the spread has left many small businesses fearful they may never be able to recover. The Senate Democrat’s bold proposed budget approach provides rent stabilization and an Economic Recovery Fund that will help California restore our economic security and lead us to better days in the future. This plan demonstrates the innovative problem solving that makes California great. We look forward to working with the Legislature and the Governor to restore the California economy, protect jobs and help our great small businesses get to work again!”
Betty Jo Toccoli
California Small Business Association
“We applaud the leadership of the California State Senate’s efforts to develop innovative approaches to finance economic development programs and projects to help expedite California’s recovery from the effects of the COVID-19 pandemic. As a leading syndicator of federal housing tax credits and an active participant in the California housing tax credit sector, we appreciate the human, social and economic impacts of COVID-19 on California, and believe that the idea of a tradeable state income tax voucher merits consideration. If the State were to issue such a security that could be bought and sold in the secondary market, we expect that there would be strong interest from institutions and other investors.”
John C. Carson Jr.
Raymond James Financial
(Raymond James Financial is an independent investment bank and financial services company providing financial services to individuals, corporations and municipalities)
“We understand the California Senate is considering plans to develop a tax voucher program to accelerate the State’s recovery from the pandemic and to fuel the future growth of its economy. Ramirez & Co., Inc., an active participant in the municipal market in both California and the nation, strongly commends and encourages all efforts of policy makers to be creative and innovative during this time of stress on state and local governments. While the market will of course reserve final judgement until a program is fully developed, the concept of creating California tax vouchers that are widely marketable can only be a positive development for California and will likely be viewed favorably by market participants.”
Samuel A. Ramirez
President and CEO
Ramirez & Co., Inc.
(Ramirez & Co., Inc. is a nationwide, full-service investment bank, brokerage and advisory firm serving the needs of thousands of individual investors, business owners and top institutional investors, corporations and government agencies in the U.S.)
Toni G. Atkins is President pro Tempore of the California Senate. Having previously served as Speaker of the California Assembly, she began her tenure in the Senate in 2016. As Senator for District 39, she represents the cities of San Diego, Coronado, Del Mar and Solana Beach. Website of President pro Tempore Toni G. Atkins: www.senate.ca.gov/Atkins