California’s governor on Thursday called for letting small businesses keep up to $50,000 in sales tax receipts for the next year as the COVID-19 outbreak has forced people to stay home and many shops to close.
Gov. Gavin Newsom said the reprieve would function as a loan to small businesses, with the state not charging fines or penalties. It likely would require approval from the state Legislature, which has recessed until at least April 13.
Newsom’s proposal comes as more than 1.9 million Californians have filed for unemployment benefits since March 12, an average of more than 111,000 claims per day over the last week.
“The economic consequences are profound,” Newsom said.
The property tax proposal could have a significant impact on the state’s more than $200 billion budget. California gets most of its money from a combination of sales and income taxes. The state has already given people an extra three months to file their income taxes, meaning state lawmakers will likely have to come up with a budget this year without knowing how much money they have to spend.
But California property owners still have to pay their property taxes by April 10. Newsom has not ordered any delays on that deadline, mostly because property taxes are one of the few funding sources that bypass the state and go directly to local governments.
Newsom proposed a $222.2 billion budget in January. But Thursday, he said that proposal “was no longer operable.”
“The world has radically changed since the January budget was proposed,” he said.
For those looking for work, the state has partnered with three companies — LinkedIn, Salesforce and Bitwise — to launch a website matching people with job listings in California. Newsom said the website, onwardca.org, already has more than 70,000 job listings. Most are in the health care, agriculture, logistics and grocery industries — essential businesses not affected by the statewide “stay-at-home” order.
Governors across the country are grappling with what businesses can stay open and which ones can close. In New York, Gov. Andrew Cuomo ordered non-essential construction sites to shut down. Officials in the San Francisco Bay area have done the same. But Thursday, Newsom said he was not planning on changing the state’s guidelines listing construction workers as an essential business exempt from the statewide “stay at home” order.
“The conditions in New York are very different than the conditions in the state of California,” Newsom said. “We’re not naive about magnitude of challenge ahead of us. All of this is subject to change. But currently, I’m satisfied with those state directives.”