SACRAMENTO — Millions of Californians would get tax rebates of up to $1,100 under a proposal unveiled Monday by Gov. Gavin Newsom, as part of a broader pandemic recovery plan made possible by an eye-popping $75 billion budget surplus.
Individuals or households making between $30,000 and $75,000 a year would get a $600 payment. Those making up to $75,000 with at least one child, including immigrants in the country illegally who file taxes, would get an extra $500 payment.
“We believe people are better suited than we are to make determinations for themselves on how best to use these dollars,” Newsom said during an event in Oakland to announce the plan.
Two out of every three Californians will will get a check for at least $600, according to a brief synopsis provided by the governor’s office. The proposal still requires approval by the state Legislature.
Budget Surplus from Wealthy Taxpayers
The massive budget surplus is largely due to taxes paid by rich Californians who generally did well during the pandemic, and marks a major turnaround after officials last year said they feared a deficit of more than $50 billion.
The payments will total an estimated $8.1 billion, said H.D. Palmer, a spokesman for the state Department of Finance. The proposal also includes $5.2 billion to pay back rent and $2 billion for overdue utility bills for people who fell behind during the pandemic.
A law passed by voters in the 1970s requires the state to give some money back to taxpayers if the surplus hits a certain limit. The state estimates it will be $16 billion over that threshold. Newsom does not have to act immediately, but is choosing to do tax rebates now, Palmer said.
They are part of what Newsom is calling a $100 billion plan to boost the state’s economic recovery. He’ll be rolling out details of the plan all week ahead of releasing his revised state budget. The chairs of the state Senate and Assembly budget committees joined Newsom, indicating their support for a proposal that will go before overwhelmingly Democratic Legislature.
Republicans Say Proposal is a ‘Publicity Stunt’ in Response to Recall Election
It comes as he faces a likely recall election later this year, and his Republican rivals quickly criticized the effort. Businessman John Cox, who campaigned alongside a bear last week for attention, accused Newsom of engaging in a publicity stunt.
“The governor’s got a lot of money to hand out. And of course, he’s worried about his own neck,” Cox said at a campaign event in Los Angeles.
He and Kevin Faulconer, another Republican candidate, both said a one-time infusion of cash wouldn’t solve California’s problems.
“Californians need permanent, real tax relief, not just one-time stimulus checks,” Faulconer, the former San Diego mayor, said in a statement.
It’s the second round of cash payments given by the state in response to the pandemic. Earlier this year, people making less than $30,000 got a $600 payment. Immigrants making up to $75,000 who file taxes, including those also living in the country illegally, also got the check. State officials chose a higher eligibility limit for those people because they didn’t get federal stimulus checks.
All combined, the state would spend $11.9 billion on direct cash payments.
Democratic Assemblyman Phil Ting, the chamber’s budget chair, said the state has the ability to help the neediest people because of how well wealthier Californians did during the pandemic. The state’s budget relies heavily on personal income tax from high earners.
“That budget surplus is going right back to the most vulnerable Californians, the ones who need help the most,” he said.