Senate Leader Atkins, Budget Chair Skinner Praise Responsible Budget Plan to Protect California’s Progress, Economy
SACRAMENTO – With California’s economy remaining sound despite recent economic challenges, Senate Democrats today unveiled the “Protect Our Progress” budget plan, which centers on responsible investments and actions.
The plan includes:
- Responsible budgeting to protect state finances through challenging times;
- Major new ongoing tax cuts for small businesses, renters, and low income workers;
- Targeted new ongoing investments in schools, homelessness reduction, health access, and child care;
- Rejection of cuts and delays proposed by the Governor to critical infrastructure and affordable housing programs;
- Partial reversal of federal tax cuts for big corporations with a modest state level increase to ensure big corporations begin to pay more of their fair share.
The Senate’s “Protect our Progress” budget plan builds on Governor Newsom’s January proposed budget and serves as a starting point for negotiations with the Assembly and the Governor’s administration. The plan includes $26 billion in solutions and builds total reserves to $38.1 billion.
Among other highlights, the plan provides over $4 billion in tax relief with a 25 percent cut to taxes for small businesses and tax cuts for renters and workers, provides over $3 billion in new ongoing funding for schools and community colleges, $1 billion in ongoing local homelessness reduction funding, and over $1 billion to increase access to child care.
Under the “Protect Our Progress” budget plan, over 99 percent of businesses (more than 1.6 million tax filers) will have their taxes reduced by 25 percent by lowering the current flat corporate tax rate of 8.84% to 6.63% on the first $1.5 million of taxable income.
In addition, about 2,500 of the biggest corporations (just 0.2 percent of all business filers), which have received a 14-percentage point drop in federal tax rates – from 35 percent to 21 percent – will have this reduction partially reversed at the state level, going from 8.84 percent to 10.99 percent on net income over $1.5 million.
Senate President pro Tempore Toni G. Atkins (D-San Diego) and Senate Budget & Fiscal Review Committee Chair Nancy Skinner (D-Berkeley) released the following statements about the Senate’s budget plan:
Pro Tem Atkins:
“There are so many economic uncertainties facing Californians right now, but we can, and we will, make it through this challenging time if we continue to rely on our responsible, common-sense approach to budgeting. Our budget structure, plus new improvements like tax relief for small businesses, continued support for schools and education, and funding to address the ongoing homelessness crisis, will do exactly what the Senate’s budget plan name implies – it will protect our progress so that we can safeguard California families from further financial harm.”
“Our state Senate 2023 budget plan is a proactive response to the lower revenues California expects this year. Budget actions we take can either harm the economy or help economic conditions. Safeguarding funding for our schools, homelessness programs, climate protection, child care, and more will help maintain jobs and lessen negative economic consequences. Our plan preserves the important advancements California has made toward a more equitable and sustainable economy while continuing the responsible budgeting that builds our reserves and rainy day funds to protect California if we face continued economic challenges. And I’m particularly proud that the Senate's 2023 plan will provide much-needed tax relief for small businesses, the backbone of our economy, while ensuring that the biggest corporations that pocketed massive tax cuts during the Trump years start paying their fair share.”
Highlights of the budget plan include:
Makes no ongoing cuts to core programs.
- No middle-class tax increases.
- Preserves the Rainy Day Fund for future years, where multi-billion dollar shortfalls remain under the Governor’s economic forecast.
- Doubles the Safety Net Reserve to over $2 billion.
- Creates a ‘budget resiliency tool’ that will allow net operating loss (NOL) deferrals for businesses tax liabilities during budget emergency years and allows for dollar-for-dollar tax credit for future.
- Rejects proposed cuts and delays to key infrastructure investments, such as broadband, transit, student housing, climate package investments, libraries, and more.
- Provides over $1 billion for child care rate enhancements from redirected child care funds, federal funds, and new resources.
- Turns current one-time funding for the HHAP program into $1 billion of ongoing funding to provide local governments the certainty they need to make the program a success.
- Accelerates previously budgeted Transit Infrastructure funds, and provides local flexibility to enable the funds to be used for operations as a bridge until a permanent operations fix can be established.
- Makes responsible new investments, such as $3 billion in new ongoing funds for schools and community colleges, maintaining current funding levels for the Middle Class Scholarship and providing Debt Free College for former Foster Youth, $1.6 billion for affordable housing, and $330 million to expand Covered CA.
- Provides $4.3 billion in tax relief by slashing tax rates by 25 percent for small businesses, improving the Renters Tax Credit and CalEITC, and implementing the Workers Tax Fairness Tax Credit.
Click here to read the Senate’s “Protect Our Progress” budget plan.