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SB-74 Keep California Working Act.(2021-2022)

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Date Published: 03/11/2021 09:00 PM
SB74:v97#DOCUMENT

Amended  IN  Senate  March 11, 2021
Amended  IN  Senate  February 02, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 74


Introduced by Senators Borgeas and Caballero
(Coauthors: Senators Allen, Archuleta, Bates, Becker, Cortese, Dahle, Eggman, Gonzalez, Grove, Hueso, Hurtado, Jones, Kamlager, Limón, Melendez, Min, Nielsen, Ochoa Bogh, Roth, Rubio, Stern, Umberg, Wiener, and Wilk)
(Principal coauthor: Assembly Member Petrie-Norris)
(Coauthors: Assembly Members Aguiar-Curry, Bauer-Kahan, Bigelow, Bloom, Burke, Chau, Chen, Choi, Cunningham, Megan Dahle, Daly, Davies, Flora, Fong, Friedman, Gallagher, Gipson, Eduardo Garcia, Lackey, Maienschein, Mathis, Mayes, Nazarian, Nguyen, Patterson, Quirk-Silva, Ramos, Blanca Rubio, Rodriguez, Salas, Seyarto, Smith, Valladares, Villapudua, Voepel, Waldron, and Wicks)

December 10, 2020


An act to add Section 12098.8 to the Government Code, and to add Sections 17131.14 and 24311 to the Revenue and Taxation Code, relating to COVID-19, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.


LEGISLATIVE COUNSEL'S DIGEST


SB 74, as amended, Borgeas. Keep California Working Act.
Existing law establishes the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development for the purpose of advocating for the causes of small business and to provide small businesses with the information they need to survive in the marketplace.
This bill, the Keep California Working Act, would establish the Keep California Working Grant Program. The act would require the Small Business Advocate to administer the program and award grants, as specified, to small businesses and nonprofit entities that meet specified criteria, including that the entity has experienced economic hardship resulting from the COVID-19 pandemic. The act would specify that grant money awarded pursuant to the program may be used only for specified purposes, including payroll costs, health care benefits, paid sick, medical, or family leave, and insurance premiums. The act would appropriate $2.6 billion dollars to the Office of Small Business Advocate for those purposes.
The Personal Income Tax Law and the Corporation Tax Law, in conformity with federal income tax law, generally define “gross income” as income from whatever source derived, except as specifically excluded, and provide various exclusions from gross income.
This bill would exclude from gross income, for state income tax purposes, the amount of a grant awarded pursuant to the Keep California Working Grant Program.
Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
The bill also would include additional information required for a bill authorizing a new tax expenditure.
This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 This act shall be known as the Keep California Working Act.

SEC. 2.

 The Legislature finds and declares all of the following:
(a) COVID-19 has altered nearly every aspect of our lives and brought a halt to much of California’s economy. Many small businesses are struggling to survive, and recent data indicates that close to one third of small businesses will not survive beyond January of 2021 without additional funding. Nonprofits have also been adversely impacted as their resources and finances have declined while demand for their services has increased. California has an obligation to support these businesses and nonprofits in reducing their financial burdens as they are forced to alter their operations in order to comply with state mandates.
(b) Prioritizing the health and safety of our community while also supporting measures that responsibly and sustainably support our economy is a responsibility we have as a legislative body. We must acknowledge the truly remarkable and selfless ways businesses and their employees have stepped up to serve our communities during this crisis and advocate on their behalf.
(c) Now more than ever, California should provide relief to small businesses and nonprofits, or we risk losing a fundamental component of our communities.

SEC. 3.

 Section 12098.8 is added to the Government Code, to read:

12098.8.
 (a) As used in this section:
(1) “Low-to-moderate income community” means a census tract, or equivalent geographic area defined by the Bureau of the Census, in which at least 50 percent of households have an income less than 60 percent of the area median gross income or that has a poverty rate of at least 25 percent.
(2) “Nonprofit” means a nonprofit entity whose annual gross revenue does not exceed five million dollars ($5,000,000) and meets any of the following criteria:
(A) The entity is qualified as tax exempt under Section 501(c)(3) of the Internal Revenue Code.
(B) The entity is qualified as tax exempt under Section 501(c)(6) of the Internal Revenue Code.
(C) The entity is qualified as tax exempt under Section 501(c)(19) of the Internal Revenue Code.
(3) “Program” means the Keep California Working Grant Program.
(4) “Rural community” means a territory, population, or housing unit located outside of an urban area or urban cluster, as determined by the most recently updated data available from the U.S. Census Bureau’s American Community Survey 5-year estimates.
(5) “Small business” means a legal entity organized for profit that meets all of the following criteria:
(A) The entity is independently owned and operated.
(B) The entity has fewer than 100 employees.
(C) The entity’s annual gross revenue does not exceed five million dollars ($5,000,000).
(6) “Underserved entity” means an entity that is a small business or nonprofit that meets either of the following criteria:
(A) The majority of the officers of the entity are women, military veterans, or members of any of the following racial or ethnic groups, as identified by the applicant:
(i) African-American or Black.
(ii) Asian.
(iii) Native American or Alaska Native.
(iv) Native Hawaiian or Pacific Islander.
(v) LatinX or Hispanic.
(B) The entity is located in a low-to-moderate income community or a rural community.
(b) The Keep California Working Grant Program is hereby established under the administration of the advocate for the purpose of helping small businesses and nonprofit organizations continue to operate during the COVID-19 pandemic.
(c) (1) The advocate shall award a grant, in an amount determined pursuant to paragraph (2), only to an applicant who meets all of the following criteria:
(A) The applicant is a small business or nonprofit that has operated since December 1, 2019.
(B) The applicant has experienced economic hardship resulting from the COVID-19 pandemic.
(C) The applicant has been negatively impacted by COVID-19 and the health and safety restrictions, including business interruptions or business closures, imposed as a result of the COVID-19 pandemic.
(2) The advocate shall determine the amount of a grant award based on the following:
(A) If the small business or nonprofit has annual gross revenue that does not exceed fifty thousand dollars ($50,000), the award shall be five thousand dollars ($5,000).
(B) If the small business or nonprofit has annual gross revenue that does not exceed one hundred thousand dollars ($100,000), the award shall be ten thousand dollars ($10,000).
(C) If the small business or nonprofit has annual gross revenue that does not exceed two hundred fifty thousand dollars ($250,000), the award shall be fifteen thousand dollars ($15,000).
(D) If the small business or nonprofit has annual gross revenue that does not exceed five hundred thousand dollars ($500,000), the award shall be twenty thousand dollars ($20,000).
(E) If the small business or nonprofit has annual gross revenue that does not exceed one million dollars ($1,000,000), the award shall be thirty thousand dollars ($30,000).
(F) If the small business or nonprofit has annual gross revenue that does not exceed two million five hundred thousand dollars ($2,500,000), the award shall be fifty thousand dollars ($50,000).
(G) If the small business or nonprofit has annual gross revenue that does not exceed five million dollars ($5,000,000), the award shall be sixty thousand dollars ($60,000).
(d) Grant money awarded pursuant to this section may be used only for any of the following purposes:
(1) Payroll costs, health care benefits, paid sick, medical, or family leave, and insurance premiums.
(2) Working capital.
(3) Rent payments.
(4) Utilities.
(5) Payments, other than prepayments, on mortgage principal and interest.
(6) Payments on nonmortgage debt.
(7) Costs reasonably associated with reopening business operations after being fully or partially closed due to state-mandated COVID-19 health and safety restrictions and business closures.
(8) Costs reasonably associated with complying with COVID-19 federal, state, or local guidelines for reopening and required safety protocols, including, but not limited to, plexiglass barriers, outdoor dining, personal protective equipment, virus testing, and employee training expenses.
(e) The advocate shall, in awarding grants pursuant to this section, give priority to all of the following:
(A) Qualified applicants that are located in areas most impacted by the effects of COVID-19 as evidenced by COVID-19 health and safety restrictions following California’s Blueprint for a Safer Economy, local county status, and regional stay-at-home orders.
(B) Qualified applicants that are impacted the most financially as measured by decline in an applicant’s gross annual revenues.
(C) Qualified applicants in retail, food and hospitality, health and wellness, and personal care, including, but not limited to, beauty and nail salons, spas, and barbershops.
(D) Qualified applicants that are underserved entities.
(f) The advocate shall adopt, as necessary, application procedures, forms, administrative guidelines, and other requirements for purposes of implementing and administering the program. All application procedures, forms, administrative guidelines, and other requirements developed by the advocate pursuant to this subdivision shall be exempt from the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(g) The sum of two billion six hundred million dollars ($2,600,000,000) is hereby appropriated from the General Fund to the Office of Small Business Advocate for the purpose of administering the program.

SEC. 4.

 Section 17131.14 is added to the Revenue and Taxation Code, to read:

17131.14.
 Gross For taxable years beginning on and after January 1, 2021, and before January 1, 2023, gross income does not include the amount of a grant awarded pursuant to the Keep California Working Grant Program, established by Section 12098.8 of the Government Code.

SEC. 5.

 Section 24311 is added to the Revenue and Taxation Code, to read:

24311.
 Gross For taxable years beginning on and after January 1, 2021, and before January 1, 2023, gross income does not include the amount of a grant awarded pursuant to the Keep California Working Grant Program, established by Section 12098.8 of the Government Code.

SEC. 6.

It is the intent of the Legislature to comply with Section 41 of the Revenue and Taxation Code with respect to the tax expenditures created by Sections 4 and 5 of this act.

SEC. 6.

 (a) For the purposes of complying with Section 41, with respect to the tax expenditure created by the addition of Sections 17131.14 and 24311 to the Revenue and Taxation Code by this act, the Legislature finds and declares that the goals, purposes, and objectives of this expenditure are to recognize the devastating impacts small business and nonprofits have faced during the COVID-19 pandemic and give them financial assistance to ensure that California does not lose these important components of our communities.
(b) (1) The Legislature shall use income reporting for the exclusion provided by the Franchise Tax Board as performance indicators to measure whether the exclusion meets the goals, purposes, and objectives stated in subdivision (a).
(2) The Franchise Tax Board shall, for taxable years beginning on and after January 1, 2021, and before January 1, 2023, determine the income brackets of individuals who claimed the exclusions allowed by this act and, notwithstanding Section 19542 of the Revenue and Taxation Code, shall provide that information to the Legislature in an annual report, submitted pursuant to Section 9795 of the Government Code, to assist the Legislature in determining whether the exclusion is helping small businesses and nonprofits recover from the economic effects of the COVID-19 pandemic.

SEC. 7.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
The COVID-19 pandemic, proclaimed a State of Emergency by Governor Gavin Newsom on March 4, 2020, has devastated California’s small business and nonprofit communities. Many have permanently closed, and without additional relief, more will follow. In order to provide timely essential relief to our struggling small businesses and nonprofits, it is necessary that this act take effect immediately.