Gov. Newsom Signs 2020-2021 State Budget
After extensive negotiations between legislative leaders and Gov. Gavin Newsom, the State Legislature passed and the governor signed a 2020-2021 budget on June 29.
The governor and legislators had to make difficult budget decisions to address the enormous state deficit as California confronts a projected $54B shortfall.
The following is an overview of the budget issues either at the forefront of Ag Council advocacy efforts or monitored by our team. It is not a comprehensive list of all budget policy matters.
Cap and Trade Program
Ag Council is pleased to report the effort to increase costs on entities participating in the cap and trade program was thwarted.
Our association worked with a coalition to remove language from a budget trailer bill that would have upended the market based cap and trade program working as designed to lower emissions in California.
Ag Council supports the existing cap and trade program given it includes cost containment mechanisms for businesses while ensuring emissions are reduced and air quality improves.
Water
Safe Drinking Water
Dozens of new positions to implement the Safe and Affordable Drinking Water program are included in the budget.
Ag Council supports the safe drinking water program. However, Ag Council voiced concerns about prioritizing staff positions over funding for actual water projects to solve the drinking water crisis for people in need.
Sustainable Groundwater Management Act (SGMA)
SGMA is provided $9.6M from the General Fund to continue implementation of the law and its regulations. The budget unfortunately eliminates $30M for local assistance grants to those impacted by SGMA implementation.
California Department of Food and Agriculture (CDFA)
The budget includes the following provisions relating to CDFA (not inclusive of all budget items):
- Eliminates $20M from the General Fund for State Water Efficiency and Enhancement Program (SWEEP) Grants;
- Redirects $1.4M from Agriculture Plant and Animal Health; Pest Prevention; Food Safety Services (a Special Fund) for staff positions to implement the Farm Animal Confinement program approved by voters as Prop.12 in 2018. Ag Council is concerned about continued redirection of such funds in the future and the possibility the funds may not be repaid since CDFA is held harmless if revenue is insufficient to repay the special fund;
- $10M to pay for six positions within the Farm to School Program;
- $2M from the General Fund for the Fresno-Merced Food Innovation Corridor, which is a reduction of $31M from the January plan, and;
- $2.7M Special Fund for the Navel Orange Worm Pilot Program – note these are federal dollars to expand this pilot program.
Tax-Related Issues
California is temporarily suspending net operating loss deductions and limiting R&D tax credits and tax credits businesses utilize to spur hiring. Ag Council and many other organizations opposed these provisions as they could impede economic recovery.
Net Operating Loss (NOL) Deductions
Under a budget trailer bill the governor signed into law, NOL deductions are suspended for three years from 2020-2022. The provision does not apply to entities with a net business income of less than one million dollars for the taxable year.
As background, budget trailer bills are policy measures considered either alongside or after the budget is approved.
Hiring Tax Credits
The same budget trailer measure includes limits on the use of tax credits used for hiring, which is counterintuitive at a time when economic incentives are more imperative than ever given many people face unemployment at this unprecedented time.
Under the provision, hiring credits could not be used to offset more than $5 million in taxes per year in 2020, 2021 and 2022.
Research and Development (R&D) Tax Credits
California is also now limiting the R&D tax credit. This critical credit helps spur innovation and job creation in California.
Ag Council is concerned about the implications of the tax provisions and their potential to stifle growth.
Food Banks
With a 73 percent increase in demand at food banks in California, $50M is provided for emergency food for people facing hunger during the pandemic. Ag Council supports the funds to help those in need during this unprecedented time.
Further, $8M in CalFood funding is in the budget to enable food banks to purchase high-demand California-produced food.
Bolster Our Communities by Investing in Water
In an op-ed published by the Bakersfield Californian on June 24, Ag Council President Emily Rooney calls upon elected federal leaders to invest in water infrastructure.
By targeting federal dollars, studies show our nation “can create up to 15,000 jobs for every $1 billion invested in clean water infrastructure,” Rooney said.
Ag Council previously joined a diverse group of over 500 entities including environmental justice, utility and ag organizations to send a clear message for Congress and our state representatives urging that any federal package to help the nation recover from COVID-19 must include water.
“We call on elected representatives to hear the voices of California farmers, residents, communities, utilities and so many others. Invest in our well-being, resiliency and security. Invest in water,” Rooney said.
Read the op-ed by clicking HERE.
Website Launches to Connect Ag and Others to PPE
With the health and wellness of our members’ employees of utmost importance, Ag Council is pleased to announce a new collaboration to assist our members working to keep their employees safe and healthy during the COVID-19 crisis.
The California Manufacturing and Technology Association (CMTA) in partnership with Gov. Gavin Newsom launched an online portal – www.SafelyMakingCA.org – to connect California employers with non-medical grade Personal Protective Equipment (PPE) for employees.
Ag Council understands the challenges some of our members face in acquiring protective gear and encourages members and friends to click HERE to view the online portal.
State Cannot Require Glyphosate Warning Labels
A federal judge ruled on June 22 that California cannot mandate a state-based cancer warning label under Prop. 65 on a glyphosate-based product.
The decision by U.S. District Judge William B. Shubb makes final his preliminary ruling concluding the Prop. 65 warning is a violation of the First Amendment.
A coalition of ag and business entities argued California’s Prop. 65 warning label was compelled speech conflicting with scientific consensus regarding the safety of glyphosate-based products.
Judge Shubb said, “…the great weight of evidence indicates that glyphosate does not cause cancer.”
Read more HERE.
COVID-19 Resources Page
Ag Council’s website includes links to federal and state COVID-19 resources relating to health and safety protections for employees.
Ag Council encourages members to review these resources at the link below and also seek out and consult local public health directives accordingly.
Please click HERE to view the pandemic resources page.