What the Federal Stimulus Package Means for California

The federal stimulus package that lawmakers in Washington have agreed to is “very encouraging news” for California, Gov. Gavin Newsom said Monday as he outlined how much of the $900 billion federal package is likely to flow to the Golden State.

“While it’s a lower number than we had hoped for, it is nonetheless significant,” the governor said.

The package did not include aid for state and local governments that Newsom spent months lobbying for. He said Congress “will need to do more in the future.”

But he didn’t dwell on that Monday, instead focusing on how a cash infusion estimated at about $50 billion — most of it for unemployment and direct stimulus checks — will help struggling Californians: “It’s money directly in your pocket,” he said.

While he cautioned that the figures are initial estimates, Newsom said California expects to receive:

• $20 billion in unemployment assistance (based on payments of $300/week for 11 weeks)
• $17 billion in direct stimulus checks of $600 each to lower-income Californians
• $2 billion in rental assistance
• $1.3 billion for COVID-19 testing, tracing and vaccines
• $8.5 billion for schools, community colleges and universities
• $1 billion for childcare
• $2 billion for transportation

California businesses will also receive relief from the $325 billion allotted to help small businesses nationwide, though Newsom did not provide an estimate of how much would flow to the state.

The federal aid was announced as Newsom prepares to present his budget proposal to state lawmakers in early January. Though many Californians lost jobs during the coronavirus pandemic, state tax revenue came in above expectations and the legislative analyst expects the state budget will be padded by a $26 billion windfall in the coming year.

Newsom said the budget he’ll propose will include more support for small and medium businesses as well as assistance for people struggling to make rent. Some 2 million Californians are at risk of being evicted on Feb. 1 after falling behind on rent during the pandemic. Newsom said he is working with legislative leaders to try to extend a ban on evictions and approve some forms of assistance before the next fiscal year begins on July 1.

“We are working overtime to see if we can advance some early decisions and make some pointed movement so we are not waiting months and months for the traditional legislative cycle,” he said.

“We have to take some early action on all of these fronts.”

Newsom also said figuring out how to expand broadband service will be a priority in 2021, as the pandemic has thrust many Californians into remote work and school that necessitates strong connection to the internet. The federal stimulus package includes $7 billion for improving broadband nationwide. Newsom said he and state lawmakers are coming up with proposals to expand broadband service in California through the budget and legislation.

Cities in California did not respond as optimistically as the governor did to being left out of the federal stimulus package.

“Revenue shortfalls resulting from the pandemic have decimated city budgets, threatening jobs, services, and local economies, yet Congress has ignored local leaders and economists who for months have been calling for federal aid to support cities’ frontline efforts and help jumpstart economic recovery,” Carolyn Coleman, executive director of the League of California Cities said in a statement.

“Providing funding to local governments is essential.”

The author wrote this for CalMatters, a public interest journalism venture committed to explaining how California’s Capitol works and why it matters.

About the Author

Laurel covers California politics for CalMatters, with a focus on power and personalities in the statehouse. Her stories explain political dynamics in the Capitol and examine how money, advocacy and relationships shape the decisions that affect Californians.