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May revision withdraws Cal Competes grant funding and reverts $11.5M from equitable payroll program; lawmakers press for local economic impact data
Summary
The May revision would withdraw $60 million in proposed Cal Competes funding and revert $11.5 million from a small-business equitable payroll fund, prompting subcommittee members to press GoBiz for data on local economic impacts.
The subcommittee took up the May revision proposals for the Governor's Office of Business and Economic Development (GoBiz). Finance staff described multiple program-level changes and reappropriation requests; lawmakers focused on two high-profile reversions.
What was proposed - Cal Competes: Finance said the May revision would withdraw $60 million the governor proposed for the Cal Competes grant program in 2025-26. - Equitable Payroll Fund reversion: The May revision proposes to revert $11.5 million that had been included in the 2023 budget act for a small-business equitable payroll fund.
Testimony and committee questioning - LAO view: Rowan Isaacs (LAO) said Cal Competes is generally well-structured and effective, and that withdrawing a year of grant funding is a reasonable choice in a constrained fiscal year; though LAO noted the program's comparative effectiveness when weighed against other business incentives. - GoBiz data gaps: Committee members asked GoBiz for analyses of who would be affected downstream by Cal Competes award reversals; GoBiz staff said they did not have granular downstream data immediately available but agreed to provide it on request. GoBiz said Cal Competes awards have targeted expanding businesses and sometimes support larger-scale retention or expansion decisions. - Arts and equitable payroll impact: Senators described local arts, culture and small nonprofits that had anticipated equitable payroll funds and said the reversion threatened recovery and jobs in local economies. GoBiz and Finance staff said choices reflected difficult general fund trade-offs.
Other May revision adjustments: Finance outlined a set of reappropriations for administrative closeout work on several GO-Biz programs and provisional reimbursement authority to meet potential federal match requirements.
Outcome: The subcommittee held the items open and requested additional data from GoBiz about the local economic and employment impact that could follow grant reversals.
Why this matters: Members emphasized that reversions of promised funds have immediate impacts on small businesses, arts organizations and local economies, and asked the administration to provide more granular impact analyses to inform budget negotiations.
