Working groups from both branches of the Legislature have a plan to spend $100 billion to stimulate the economy without raising taxes. Assembly and Senate leaders, along with budget chairs, endorsed the approach on Monday.
The plan would draw instead on previously allocated funding for transportation, broadband and infrastructure, which could include Prop 1 funding for water projects. It would also borrow from the federal government, expand tax credits for low-income individuals and offer tax breaks to small businesses.
Vowing to invest in the green economy, the plan relies on future cap-and-trade funds “to backfill lost revenues due to the downturn and ensure critical programs remain funded.” This was a sticking point with many lawmakers during budget negotiations in June. Ag industry advocates fear this change in rulemaking for the cap-and-trade market could lead to higher costs on farmers and take funding away from critical incentives programs.
Assemblymember Adam Gray of Merced said the plan “must prioritize small and rural communities, which lack the local resources and reserves to mitigate the worst impacts of this pandemic.”
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Republicans, who did not participate in the working groups, cautioned the plan may sound appealing in its broad strokes, but “the devil is always in the details.”
The Legislature has five weeks left in its session to wrap up budget measures and other bills. Yet leaders negotiate a special session with the governor to further debate any of the hundreds of bills still on the table.
Top photo: Asm. Speaker Anthony Rendon in 2019.
