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May Revision would withdraw CalCompetes grant funding and revert payroll equity and arts-related appropriations; businesses and arts advocates warn of local rip
Summary
The May Revision would withdraw $60 million proposed for CalCompetes grants and revert $11.5 million from the state’s Small Business Equitable Payroll Fund, GoBiz and Finance staff told a Senate Budget subcommittee.
Subcommittee members questioned the administration about May Revision changes to the Governor’s Office of Business and Economic Development (GoBiz) proposals, including a proposed $60 million withdrawal for the CalCompetes grant program and a reversion of $11.5 million from the Small Business Equitable Payroll Fund (authorized in 2023). Finance and GoBiz staff said the May Revision reduces or reappropriates several items to address the state's fiscal condition.
Department of Finance analyst Charles Lassol outlined the changes: the May Revision would withdraw $60 million that the governor's budget had proposed for CalCompetes grants in 2025‑26 and would revert $11.5 million in general‑fund support for the Small Business Equitable Payroll Fund that had been included in 2023. The May Revision also proposes several reappropriations tied to administrative closeout work and to align encumbrance periods for programs moved between agencies.
LAO assessment and committee questions: The LAO told the subcommittee that CalCompetes overall has performed relatively well as an economic development tool, but the three‑year grant element was supplemental, so withdrawing the money is a reasonable choice in a tight budget year. The LAO cautioned the subcommittee, however, that other programs with less evidence of effectiveness continue to receive funding, creating a tradeoff.
Local impacts: Senator Smallwood Cuevas and other members described real‑world impacts in their districts, especially for arts and cultural nonprofits and small businesses that relied on the equitable payroll fund. Committee members asked GoBiz to provide granular information about which businesses — and which communities — will be affected by withdrawing CalCompetes grant funding; GoBiz staff said they do not have that level of impact data on hand but would follow up with the subcommittee.
Other technical reappropriations: GoBiz also requested reappropriations for administrative work connected to previously enacted programs (zero‑emission vehicle program, containerized ports interoperability grants, women's business centers enhancements) and provisional reimbursement authority in case of a large federal award.
Ending: The subcommittee left the GoBiz items open and asked staff to provide more detailed impact analyses, including profiles of businesses and communities affected by the CalCompetes withdrawal and the payroll fund reversion.
