California Governor Gavin Newsom (D) advanced his fiscal year 2021-22 proposed budget to the legislature on January 8. The budget provides for expansion of existing business incentive and tax relief programs and introduces new initiatives to support and expedite California’s economic recovery in the wake of the economic dislocation brought about by COVID-19. Governor Newsom’s proposed budget includes increased funding for the California Competes Tax Credit (CCTC) in both fiscal years 2020-21 and 2021-22. The proposed budget also establishes a grant component of the California Competes program to expand the pool of businesses that can benefit from the program.
This proposal will be part of a package of proposals on which the administration requests the legislature to take early action in 2021.
The governor’s budget proposal seeks to expand the CCTC and create a new grant program in order to accelerate economic recovery and job creation as California recovers from the COVID-19 pandemic. Companies that are either conducting multi-state site selection analyses for future growth or considering whether to stay and grow in California should closely monitor this proposal regardless of whether they expect to pay cash tax in California.