State Assistance to Businesses in Response to Covid-19

2024-25 BUDGET State Assistance to Businesses in Response to COVID-19 GABRIEL PETEK | LEGISLATIVE ANALYST JANUARY 2024 www.lao.ca.gov 1 AN LAO REPORT 2 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT INTRODUCTION This report provides an analysis of state types of communities, defined using zip codes, assistance given to businesses in response that received more state and federal assistance. to COVID-19. The first section of this report The report concludes with some findings and includes background information on the state and comments for the Legislature. This report fulfills federal programs that provided both broad and our statutory requirements under Section 16 of targeted relief to businesses. The second section Chapter 55 of 2022 (AB 194, Committee on Budget) describes the industries that received the most and Section 22 of Chapter 3 of 2022 (SB 113, public assistance. The third section describes the Committee on Budget and Fiscal Review). WHAT ASSISTANCE DID THE STATE AND FEDERAL GOVERNMENTS PROVIDE? Pandemic Had Significant Economic Impacts. Later in 2020, the federal government provided a In early 2020, in response to the onset of the second round of PPP loans to businesses that had COVID-19 pandemic, state and local officials took no more than 300 employees and a 25 percent steps to limit the spread of the disease. This included reduction in gross receipts between 2019 and 2020. Governor Newsom’s statewide stay-at-home order These second-round loans were also eligible for and various other state and local directives that forgiveness. In California, about 1 million businesses limited daily activities. These efforts, as well as received about $100 billion in PPP loans from health concerns, sharply depressed economic both rounds, including $96 billion in forgiven loans activity across the state, resulting in unprecedented (see Figure 1). job losses and major financial challenges for businesses of all sizes. In response, the federal and Figure 1 state governments enacted a variety of policies and programs to aid businesses, including grants, loans, Federal Assistance to Businesses in and tax relief. California in Response to COVID-19 Federal Business Relief Provided Mainly (In Billions) Through the Paycheck Protection Program (PPP). The single largest business assistance program Paycheck Protection Program Total loans $101.7 during the pandemic was PPP, a forgivable loan Loans forgiven 96.4 program created in March 2020. This program Restaurant Revitalization Fund 5.7 provided funding for eligible businesses to borrow Shuttered Venue Operators Grants 2.4 money from private lenders. If the businesses met Economic Injury Disaster Loan Advance Grants 2.7 certain conditions, such as maintaining specified employment and compensation levels, they could apply to the federal Small Business Administration Federal Government Also Provided Additional (SBA) to have those loans forgiven. The federal Targeted Programs. In addition to PPP, the government fully covered the costs of these federal government provided additional, targeted forgiven loans. In authorizing legislation, Congress aid to businesses in industries highly impacted by expressed its intent that SBA should prioritize COVID-19. These programs included: businesses in underserved and rural markets, 1. Restaurant Revitalization Fund (RRF). including to veterans and businesses owned by Created in March 2021, the RRF provided economically disadvantaged individuals, women, grants to eligible restaurants, caterers, and and businesses in operation for less than two years. bars that experienced a decline in revenue www.lao.ca.gov 3 AN LAO REPORT during the pandemic. RRF grants provided Senate Bill 113 also excluded businesses’ restaurants with up to $10 million in lost grants from the RRF and SVOG programs from revenues, but no more than $5 million per taxable income. physical location. California restaurants State Provided Grants to Small Businesses. received nearly $6 billion from the In addition to the federal programs and state tax RRF program. relief on that assistance, the state provided its own 2. Shuttered Venue Operators Grant assistance to businesses in response to COVID-19. (SVOG). Created in December 2020, The largest of the state programs was the California SVOG provided grants to eligible theatres; Small Business COVID-19 Relief Grant (SBCRG) performing arts organizations; and other program, administered through the Governor’s cultural institutions, such as museums, Office of Business and Economic Development zoos, and aquariums. Eligible applicants (Go-Biz). Grant applications and disbursements could qualify for grants that replaced up to were administered by Lendistry, a private company 45 percent of their gross earned revenue and small business lender. Through this program, with a maximum award of $10 million. the state provided grants between $5,000 and California venues received about $2 billion $25,000 to eligible small businesses and nonprofits in SVOG grants. impacted by COVID-19, depending on their annual 3. Economic Injury Disaster Loan (EIDL) gross revenue. To be eligible, businesses needed Advance Grants. Before the onset of to meet a variety of criteria, including having: a the pandemic, through the preexisting physical presence in the state, less than $5 million EIDL program, the SBA made disaster loans in annual gross revenue, and being in operation to small businesses. In March 2020, Congress since at least June 2019. In total, the state provided created a new program to advance $10,000 about $3.7 billion in grants through to this program. to qualified small business that applied for State Also Provided Additional Targeted an EIDL related to the COVID-19 pandemic. Grants. In addition to SBCRG, the state also The advances did not need to be repaid, provided a variety of other, smaller, grant programs regardless of whether the businesses were for businesses and nonprofits in response to eventually approved for a loan. California COVID-19. Similar to the federal programs, some of businesses received nearly $3 billion in these were targeted toward specific industries and pandemic-related EIDL advance grants. business types. They are described in the nearby State Tax Relief Extended to the Various box. (The box does not include state loan programs Federal Programs. Typically, federal and state and/or other tax relief, such as the Main Street tax tax laws would treat grants and forgiven loans credit. These programs are not included in this as taxable business income. In response to the analysis because we do not have business or zip pandemic, however, Congress changed federal code-level data for them.) laws to exclude the above pandemic-related We Did Not Have Direct Data on Tax Relief business assistance programs from taxable on Federal Programs. The remainder of this income. The state partially conformed to this report analyzes the distribution of state tax relief federal treatment. Specifically, Chapter 39 of associated with federal PPP loans and other grant 2020 (AB 1577, Burke) and Chapter 17 of 2021 programs, as well as the SBCRG program. We (AB 80, Burke) partially conformed state tax laws have business-level data on SBCRG, but do not to the federal treatment of forgiven PPP loans have direct sources of data on tax relief because and EIDL advance grants. Taxpayers that were businesses’ tax filings do not include information on publicly traded companies or did not have at excluded income. Instead, we have used SBA data least a 25 percent reduction in gross receipts on PPP as a proxy for the businesses that would be were excluded from this provision. Assembly eligible for tax relief on federal grants and forgiven Bill 194 extended the state’s tax treatment to loan loans. In particular, businesses were eligible for amounts forgiven under the second round of PPP. state tax relief on forgiven loans if they had at least 4 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT a 25 percent reduction in gross receipts—and that As a result, throughout this report, for all federal was the same requirement for eligibility for the programs, we report figures in terms of total loans second round of PPP. Therefore, as an indicator of and grants provided to businesses in California, not which businesses received PPP-related tax relief, the specific amount of tax relief. we use data on California businesses that received loan forgiveness on exactly two rounds of PPP. Other State Grants California Venues Grant Program. Under this program, the state provided a total of roughly $150 million in competitive grants to support eligible independent live events venues and $15 million to support independent theaters. The maximum award to each venue was the lesser of $250,000 or 20 percent of the venue’s gross earned revenue. Funds were distributed through Lendistry. California Microbusiness COVID-19 Relief Grant Program. Under this program, the state provided a total of $50 million in grants to eligible microbusinesses distributed to each county according to its population. The maximum award for each microbusiness was $2,500. Funds were distributed through county government agencies and a consortium of nonprofits. California Nonprofit Performing Arts Grant Program. Through this program, the state provided roughly $40 million in grants to nonprofit performing arts organizations, including: theater companies and dinner theaters, dance companies, musical groups and artists, and other performing arts companies. To qualify, the performing arts organization needed to be a registered nonprofit and have no more than $2 million in annual gross revenue. Grant amounts to each organization ranged from $25,000 to $75,000 based on annual gross revenue. Funds were distributed through Lendistry. California Dream Fund. Under this program, the state provided a total of roughly $30 million in grants to seed entrepreneurship and small business creation. New entrepreneurs and small-business owners completed a training program through select participating centers of the Technical Assistance Expansion Program. Following successful completion of the program, new businesses were eligible to apply for the microgrant, up to $10,000. Funds were distributed through Lendistry. www.lao.ca.gov 5 AN LAO REPORT WHAT TYPES OF INDUSTRIES RECEIVED MORE ASSISTANCE? This section describes the types of industries that received more Figure 2 state tax relief associated with PPP loans and other federal grants State Small Business Grants by Industry and SBCRG. (In Millions) Most State Grants Went to Businesses in Health, Health Dentists Accommodation, and Accommodation Restaurants Professional/Technical Services. Professional/Technical Lawyers Figure 2 shows the distribution Retail Trade Used Car Dealers of SBCRG by industry. As the Personal Care Services Beauty Salons figure shows, most grants went Transportation Taxi and Rideshares to businesses in the following Construction Residential Remodelers industries: health; accommodation Other Services (mostly restaurants); and Manufacturing professional/technical, which Arts Artists, Writers, and Performers includes lawyers, accountants, Wholesale Trade and engineers. Real Estate Real Estate Agents and Brokers Most PPP-Related Tax Administration Janitorial Services Relief Went to Businesses in Education Accommodation, Manufacturing, Finance/Insurance and Construction. Figure 3 Information Motion Picture and Video Production shows the distribution of PPP Management loans eligible for state tax relief 100 200 300 400 $500 by industry. As the figure shows, most of these forgiven loans went to businesses in the following industries: accommodation (mostly types of assistance went to industries with more restaurants), manufacturing, and construction. job losses. (This relationship appears to be driven State Assistance Generally Targeted by more than industry size.) For example, the Industries With More Job Losses. We examined accommodation and food services industry, in whether or not industries that received more particular, was the most highly impacted in job state assistance were also more impacted by the loss terms and also received proportionally more pandemic—as measured by job losses. Figure 4 assistance. Also, for most industries, there appears shows the share of each industry’s state grants to be a slightly stronger relationship between state and PPP loans eligible for tax relief compared to grants and job losses compared to PPP forgiven its share of total job losses (measured between loans and job losses, perhaps indicating the state February 2020 and April 2020). The figure shows grants—although much smaller—were slightly better a positive relationship, meaning more of both targeted toward the more impacted industries. 6 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT Figure 3 PPP Loans Eligible for State Tax Relief by Industry (In Millions) Accommodation Restaurants Manufacturing Commercial Building Construction Construction Professional/Technical Lawyers Other Services Religious Organizations Health Dentists Physicians Retail Trade New Car Dealers Transportation Taxi and Rideshare Wholesale Trade Administration Landscaping Services Arts Education Elementary and Secondary Schools Real Estate Information Motion Picture and Video Production Finance/Insurance Management 400 800 1,200 1,600 $2,000 PPP = Paycheck Protection Program. Figure 4 Generally, Industries With More Job Losses Received More State Grants and PPP-Related Tax Relief 20% 18 Professional, Scientific, 16 and Technical Services Accommodation and Food Services 14 12 Health Care and Social Assistance Construction 10 Transportation Retail Trade 8 and Utilities 6 4 2 Information 5 10 15 20 25 30 35% Industry Job Losses (As a Share of Total) PPP = Paycheck Protection Program. www.lao.ca.gov 7 ecnatsissA ssenisuB latoT fo erahS State Grants PPP-Related Tax Relief AN LAO REPORT WHAT TYPES OF COMMUNITIES RECEIVED MORE ASSISTANCE? This Analysis Focuses on Community-Level, relationships to disseminate information about state Not Business-Level, Impacts. Ideally, and federal programs. These groups expressed that our analysis would have considered both they were less likely to have existing communication business- and community-level impacts of state channels with rural businesses and found them to and federal assistance to California businesses be generally more difficult to reach, in some cases during the pandemic. However, we do not have due to how diffuse and distributed they are across detailed data on the demographic and economic large geographical areas. This, in particular, posed characteristics of business owners for either a challenge for increasing awareness of the state’s program, which means we must largely focus only grant programs, which were much smaller and less on community-level impacts. For this analysis, we well-known than federal PPP loans. use zip codes—the smallest unit of geography Larger Metro Regions Received More that we have available. In the remainder of this PPP-Related Tax Relief and State Grants. section, using zip code-level data, we examine a We also examined how PPP eligible for state tax few different characteristics of the communities relief and SBCRG were distributed across metro that received more state and federal assistance, area. As Figure 6 on page 10 shows, per business including: geography, income, and race in the area, larger metro regions tended to receive and ethnicity. more in both types of assistance, most notably, Los Angeles, San Francisco, and San Jose. Urban and Metropolitan Zip Codes Smaller metro areas—like Ukiah, Crescent City, Urban Zip Codes Received More PPP-Related and Truckee—received much less in both types Tax Relief and State Grants. Figure 5 shows that, of assistance. One outlier in this trend is Napa, on a per-business basis, zip codes in metropolitan which received considerably more PPP-related loan areas received more PPP loans eligible for state forgiveness per business than any other area of tax relief and SBCRG compared to other types any size. This general finding is also consistent with of zip codes. (The nearby box provides some our conversations with business groups. Groups more information on the sources of data and located in larger metro areas expressed they had definitions supporting this analysis.) In both cases, better established relationships and pre-existing rural zip codes received the least assistance per methods of communication with businesses in their businesses. This finding is consistent with some areas. That said, a business group in one large conversations we had with business groups who metro areas did express some challenges unique indicated that they used pre-existing networks and to large metros, for example, the need for a broad range of translation services given the many of Figure 5 languages used in those metros. Urban Areas Received More RRF and SVOG Did Not Display as Strong Assistance Than Rural Areas of a Correlation With Metro Size. We also examined whether state tax relief associated with Amount of Loans or Grants Per Establishment the two other main federal programs—RRF and PPP Loans SVOG—displayed a correlation with the size of Forgiven State Grants the metropolitan area in which businesses were Urban—Metropolitan $97,651 $3,690 located. For these programs, the relationship is Small Town 96,594 2,668 less clear. Figures 7 on page 11, and Figure 8 on Urban—Micropolitan 74,984 2,842 page 12, show the amount of restaurant grants Rural 66,220 2,639 and shuttered venue grants, respectively, by metro PPP = Paycheck Protection Program. area (scaled using total businesses in that area). 8 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT Data Sources and Definitions Geography. We used the U.S. Department of Agriculture’s rural-urban commuting codes to categorize all zip codes in the state according to whether they are: metropolitan, micropolitan, small town, or rural. A metropolitan area is an area that has a city with at least 50,000 residents. A micropolitan area is one that has a city with 10,000 to 50,000 residents. A small town has more than 2,500 residents but fewer than 10,000 residents. All other areas are considered rural. We used the Census Bureau’s core-based statistical areas to define zip codes according to major metro region. Income. We used data from the 2021 American Community Survey (ACS) to measure median household income for each zip code. We then placed all California zip codes in one of four categories: low income (less than or equal to $61,000), medium-low income ($61,001 to $81,000), medium-high income ($81,001 to $110,000), and high income (greater than $110,000). Statewide, the median zip code had median household income of nearly $89,000 in 2021. Race and Ethnicity. We used ACS data to determine the share of residents of each zip code who are white, Black, Asian, or Hispanic/Latino. We define a zip code as “higher representation” of a specific race or ethnicity if the zip code is above the 90th percentile among all other zip codes in terms of its percentage of that race or ethnicity. Importantly, this does not necessarily mean the zip codes have majorities of residents with this race or ethnicity. Using this measure, “high representation white” is defined as zip codes where at least 85 percent of residents are white, “high representation Hispanic/Latino” is 71 percent, “high representation Black” is 10 percent, and “high representation Asian” is 28 percent. Some Northern California metros, including San shows the how much grants in higher-income zip Francisco, San Jose, Napa, and Salinas received codes exceeded the lowest-income zip codes disproportionally more restaurant grants while in percent terms. As the figure shows, while some Southern California metro areas, including middle- and higher-income zip codes received San Luis Obispo and Los Angeles, received more slightly more in state grants than lower-income zip shuttered venue grants. codes did, the difference is more pronounced for federal PPP loans. This suggest the state’s small Higher-Income Zip Codes business grant program was slightly better targeted Higher-Income Zip Codes Received toward low-income communities compared to PPP More Total Assistance. Figure 9 (left side) on and the associated state tax relief. page 13, shows the total amount of state and federal assistance by zip code using four income Zip Codes With More categories. (See the previous box for a description Non-White Residents of how these categories were defined.) As the More Assistance Went to Zip Codes With left side of the figure shows, the highest-income Higher Representation of Hispanic/Latino, zip codes received the most total assistance Black, and Asian Residents. Figure 10 on from state grants and federal loan forgiveness. page 13 shows how much state and federal Meanwhile, the lowest-income zip codes received assistance went to zip codes with a higher the least assistance. representation of different races and ethnicities. State Grants More Similar Across Zip Codes (The previous box describes how we categorize zip by Income. That said, state grants were more codes using race and ethnicity data.) As the figure equally distributed across zip codes by income than shows, zip codes with higher representations of federal PPP loans were, particularly those eligible non-white residents all received more assistance for state tax relief. Figure 9 (right side) on page 13, than the statewide average, while zip codes with a www.lao.ca.gov 9 AN LAO REPORT Figure 6 Larger Metro Areas Received More PPP-Related Tax Relief and State Grants $4,500 Merced San Jose-Sunnyvale-Santa Clara San Francisco-Oakland-Hayward $4,000 Los Angeles-Long Beach-Anaheim Madera Sacramento-Roseville-Arden Arcade Santa Maria-Santa Barbara 3,500 Napa Santa Cruz-Watsonville Riverside-San Bernardino-Ontario Vallejo-Fairfield Santa Rosa Yuba City San Diego-Carlsbad 3,000 Clearlake Chico El Centro Crescent City, CA Bakersfield Sonora 2,500 Other Red Bluff Ukiah Hanford-Corcoran Truckee-Grass Valley Redding 2,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000 120,000 130,000 $140,000 PPP = Paycheck Protection Program. higher representation of white residents received Several Plausible Explanations. We have less. Importantly, this does not speak to the race some plausible explanations for this finding. or ethnicity of the business owners who received First, zip codes with a higher representation of the assistance. It should not be interpreted to mean white residents also tend to be disproportionately that Hispanic/Latino-, Asian-, and Black-owned rural and lower income. These zip codes have businesses received more assistance than a median income of $79,000, somewhat lower white-owned businesses. than the statewide average of $89,000, and This Finding Is Somewhat Surprising. The are nearly 40 percent rural compared to the finding that more assistance went to zip codes statewide average of 8 percent. As we discussed with higher representation of non-white residents is earlier, rural and lower-income zip codes tended somewhat surprising for a couple of reasons. First, to receive less assistance than their urban zip codes with higher representations of Hispanic/ and higher-income counterparts. Second, zip Latino and Black residents are, on average, lower codes with higher representation of Black and income, and we found that more assistance went Hispanic/Latino residents tend to have higher to higher-income zip codes. Second, as described shares of service-oriented industries. As we below, there has been other research documenting discussed earlier, those industries were the most racial disparities in PPP loans among business highly impacted by the pandemic and also tended owners, particularly that Black business owners to receive more state and federal assistance. received fewer PPP loans compared to white Statewide, about 27 percent of businesses are businesses owners. either in accommodation, retail, and personal care and other services. In zip codes that have a higher representation of Black residents, 32 percent 10 LEGISLATIVE ANALYST’S OFFICE )aerA ni ssenisuB reP( stnarG ssenisuB llamS etatS Eureka-Arcata-Fortuna Visalia-Porterville PPP Loans Forgiven (Per Business in Area) AN LAO REPORT of businesses are in these Figure 7 service-oriented industries. The figure is 35 percent for zip codes Restaurant Revitalization Fund Grants by that have a higher representation Metro Area in California of Hispanic/Latino residents. Amount of Grant Per Business in Metro Area Statewide Lendistry Data on Business Owner Race and San Francisco-Oakland- Ethnicity. Although we were Hayward not able to obtain data from San Jose-Sunnyvale-Santa Clara Lendistry on the demographic Napa characteristics of the businesses Salinas Los Angeles-Long Beach- owners who received SBCRG Anaheim at a business level, they have Santa Cruz-Watsonville San Diego-Carlsbad shared statewide demographic Santa Rosa data. Lendistry reported that, Santa Maria-Santa Barbara statewide, about half of the San Luis Obispo-Paso Robles- small business COVID-19 grants Arroyo Grande El Centro were distributed to white-owned Sacramento-Roseville- Arden Arcade businesses, 32 percent of the Riverside-San Bernardino-Ontario grants went to Asian-owned Chico businesses, 18 percent went Sonora to Hispanic- or Latino-owned Vallejo-Fairfield businesses (regardless of race), Merced and 11 percent went to African Oxnard-Thousand Oaks- Ventura American-owned businesses. Modesto Lendistry’s method for collecting Fresno and reporting race and ethnicity Truckee-Grass Valley data does not appear to align with Eureka-Arcata-Fortuna Census data on race and ethnicity Visalia-Porterville in the state. Consequently, Ukiah we cannot directly compare Bakersfield these statistics to statewide Stockton-Lodi Hanford-Corcoran demographic data. Crescent City Other Research on Federal Yuba City PPP Program Has Documented Madera Racial Disparities Among Redding Business Owners. Research Clearlake nationally and in other states has Susanville found consistent evidence of Red Bluff racial disparities in the distribution 2,000 4,000 6,000 8,000 10,000 $12,000 of PPP loans, particularly for Black-owned businesses. These findings include, for example, that data limitations, we were unable to examine state Black-owned firms were about and federal aid in California at a business level in 9 percent less likely to receive PPP loans than this report. We are not aware of any high-quality similar white-owned firms and, among Black-owned studies on loan distribution in California that businesses that received loans, those loans were documented the presence—or lack thereof—of approximately 50 percent smaller than those loans racial disparities at a community level. made to similar white-owned businesses. Due to www.lao.ca.gov 11 AN LAO REPORT Figure 8 Shuttered Venue Operators Grants by Metro Area in California Amount of Grants Per Business in Metro Area Santa Rosa San Luis Obispo-Paso Robles- Arroyo Grande Los Angeles-Long Beach-Anaheim San Francisco-Oakland-Hayward Salinas Santa Maria-Santa Barbara San Diego-Carlsbad Napa Modesto Santa Cruz-Watsonville Truckee-Grass Valley Oxnard-Thousand Oaks-Ventura Bakersfield Sonora Eureka-Arcata-Fortuna Madera San Jose-Sunnyvale-Santa Clara Chico Fresno Susanville Sacramento-Roseville-Arden Arcade Redding Riverside-San Bernardino-Ontario Ukiah Red Bluff Merced Vallejo-Fairfield Visalia-Porterville Crescent City Stockton-Lodi Clearlake El Centro Yuba City Hanford-Corcoran 1,000 2,000 3,000 4,000 $5,000 12 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT Figure 9 Higher-Income Zip Codes Received More Total State and Federal Assistance (In Billions) But State Grants Were More Equally Distributed Statewide Average $100 Percent Difference Relative to Lowest-Income Zip Code 30% 50 20 10 110K+ >61K 61K-81K 81K-110K 110K+ >61K 61K-81K 81K-110K State Assistanceª PPP Loans Eligible for State Tax Reliefb All Other PPP Loans a Includes small business and nonprofit grants, venues grants, and performing arts grants. b Payment Protection Program forgiven for businesses that received exactly two rounds of loans, restaurant grants, and shuttered venues grants. Figure 10 Zip Codes With More Non-White Residents Received More Total Assistance Mean Amount Per Establishment by High Representation Zip Codes $140,000 100,000 60,000 20,000 Hispanic/Latino Black Asian Statewide White Average State Assistancea PPP Loans Eligible for State Tax Reliefb Other PPP Loans "High representation" indicates that the zip code is in the 90th percentile statewide in terms of its share of the identified race or ethnicity. a Includes small business and nonprofit grants, venues grants, performing arts grants. b PPP loans forgiven for businesses that received exactly two PPP rounds, plus restaurant grants and shuttered venues grants. PPP = Paycheck Protection Program. www.lao.ca.gov 13 AN LAO REPORT FINDINGS Legislature Has Very Little Information About from a state budget perspective. The relative size Recipients of State Grants. Ideally, this report differences between the state and federal programs would have included a business-level analysis on also likely contributed to a lack of broad awareness the recipients of pandemic-related assistance, about the state’s grants. In our interviews with particularly for the state’s grant programs. However, business groups, we observed that there seemed to Go-Biz was unable to provide us with business-level be a very limited awareness of state programs, even demographic data on grant recipients. (We among some regional Chambers of Commerce, understand that Go-Biz cannot request this data which played a key role in disseminating information from Lendistry because it was not part of the to businesses about government assistance. original contract with the entity.) With better data, That said, this apparent lack of awareness did not we would have been better positioned to analyze prevent the state from disseminating nearly all of whether there were racial and ethnic, gender, or the assistance appropriated by the Legislature. other disparities in the state’s programs. In the State Assistance Complemented Federal future, we would suggest the Legislature consider Assistance in Some Ways, Duplicated It in directing the administration to include reporting Others. Through this analysis, we have some requirements on demographics in its contracts with evidence the state programs did, to some extent, private firms and standardizing questions about complement, rather than duplicate, federal race and ethnicity to align with Census data. This assistance. For example, we found that there was could be particularly useful in cases where the somewhat more dissemination of state assistance Legislature is interested in targeting assistance, among industries that experienced more job losses especially to address a potential disparity. compared to federal assistance. State assistance State Business Assistance Was Significant was also more equally distributed across zip to the State Budget, but Dwarfed by Federal codes by income compared to federal assistance. PPP Program. As we discussed in this report, Geographically, however, both state and federal state assistance to businesses represented a very assistance appeared to have better dispersion in small share of the overall assistance provided urban and large metropolitan areas and less in rural to businesses during the pandemic because areas and small cities. In light of these disparities, federal aid was so significant. Nonetheless, the the state programs could have been better targeted state grants—with program costs totaling roughly to rural Californians in order to partially mitigate a $4.5 billion across all programs—were not trivial weakness of the federal program. 14 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT www.lao.ca.gov 15 AN LAO REPORT LAO PUBLICATIONS This report was prepared by Ann Hollingshead, and reviewed by Brian Uhler and Carolyn Chu. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, California 95814. 16 LEGISLATIVE ANALYST’S OFFICE