I received a form 1099-MISC for the SoCal Water$mart turf removal program rebate we received 2020. Is this fully taxable on federal and state (California) level?

Yes, this is taxable on your federal return but can be subtracted out of your California return.

A turf removal rebate included in your federal income may be subtracted out of your income in TT/Calif.

1. log into Turbo Tax
2. Select State in the left hand side of your screen.
3. Go ahead and select California as your state and navigate throughout your screens
4. Go to the screen Here's the income that California handles differently, under Home select water and energy rebates or may be listed as  Turf Removal Incentives. 
5. This will subtract out the income in your California return.
6. Since this is an improvement, you can the costs of this project to the basis of your house. What this does is increase your basis so when you do sell your house, there are less capital gains to pay if you do have a capital gains situation.

Thanks for your quick response. I assume there's nothing I can do for the federal return to offset those taxes?

No, there is not a way to offset this income on your federal return.