California Gov. Gavin Newsom has signed a budget trailer bill allocating an estimated $11.5 million to small performing arts organizations to help them recover from the pandemic and comply withAB5,the 2019 law requiring more workers to be paid as employees instead of independent contractors.

The allocation comes from unused funding previously earmarked for the arts as part of the California Venues Grant Program and the California Nonprofit Performing Arts Grant Program, both geared toward pandemic recovery. The move activates the Equitable Payroll Fund created bySB1116last year.

“It’s an affirmation of the need and the vitality of smaller theaters throughout the state,” said Barbara Hodgen, executive director of New Conservatory Theatre Center. “A lot of people really build their chops by working at smaller theaters, until they grow up and fly away. We’re the R&D branch of the theater world, and it’s nice to have that recognized and supported.”

State Sen. Anthony Portantino, D-La Cañada Flintridge (Los Angeles County), who introduced SB1116, had sought $300 million for the fund to better meet statewide demand, but that request never made it into the state budget.

Still, the signing of twin budget trailer bills SB104 and AB104 brought together parties usually on opposite sides of the bargaining table: arts laborers and arts employers.

“This funding is a win for everyone,” said Kate Shindle, president of the nationwide union Actors’ Equity Association, in a statement. “It will ensure that actors, stage managers and other creative professionals are properly classified as employees — ensuring protections like workers’ compensation and unemployment insurance — while providing resources to not-for-profit theaters struggling to comply with that additional expense.”

Theatre Producers of Southern California President Martha Demson echoed Shindle’s praise.

“We believe this represents a critical step toward rebuilding sustainability for California’s small nonprofit performing arts organizations and for expanding job opportunities for thousands of underemployed creative workers in the sector,” she said in a statement.

Only performing arts nonprofits with annual budgets of $2 million or less are eligible to apply for Equitable Payroll Fund grants. The smaller its budget, the more funding an organization can get. Companies making $250,000 or less per year can get reimbursed up to $8,000 in payroll expenses per employee per quarter; those making $1,750,001-$2 million per year can get up to $2,000 per employee per quarter.

该基金可能只能满足一小部分的demand — there are hundreds of small nonprofit theaters in the Bay Area alone — and its source is nonrenewable. Still, said Californians for the Arts CEO Julie Baker, the allocation is cause for optimism in a year when she’d heard the budget would be tight. “This is just the beginning,” she told the Chronicle. “It will give us the time and funding to implement the bill.”

AB5, which went into effect Jan. 1, 2020, targeted ride-hailing companies such as Uber and Lyft and other gig economy companies. Later that year, voters passed a proposition exempting Uber, Lyft, DoorDash, Instacart and Postmates from AB5, a vote that was upheld in court this yearon appeal.

So while for-profit targets of the law found a way around it, small nonprofit theaters haven’t — and they continue to suffer the pandemic aftershocks of inflation, stubbornlylow attendanceand venue closures. Pandemic-spurred government support has all run out.

Sean Fenton, executive director of service organization Theatre Bay Area, said that many theater producers appreciate the spirit behind the law, that workers deserve fair compensation and workplace protections.

“But having that happen overnight was a huge stress on most of our membership,” he said, adding that for many of his member theaters’ staffing costs jumped 20%-30% under AB5. Today, he went on, “it’s hard to divorce AB5 from the rest of the challenges from the pandemic.”

To address those challenges, theaters have made sacrifices; many are producing fewer shows and more one- and two-person plays in the slots they have left. “We do not invest a lot in sets,” said Adam Maggio, managing director of San Francisco Bay Area Theatre Company.

Emma McCool, executive director of Killing My Lobster, said her company rehearses less, which now means that if any actor gets sick and misses rehearsal, there’s no wiggle room to make it up. “It’s running us ragged,” she said. The company recently announced it was pausing the rest of its 2023 season to regroup.

To try to ensure permanent support for the Equitable Payroll Fund, advocates know they have to promote the notion that arts funding isn’t a handout but an investment, creating jobs in other sectors, making city corridors desirable, building neighborhood identity and trust.

“It’s really critical that we pay our workers a living wage,” said Baker. At the same time, she went on, “As I jokingly say, we don’t only want to see monologues for the rest of our lives.”

Reach Lily Janiak:ljaniak@sfchronicle.com