Newsom: Gas Rebate Would Be Delayed Until October Under Legislature Plan

Governor touts DMV as quickest alternative to getting money back

After a flurry of proposals from Sacramento in March to send money back to Californians, a rebate check could still be nearly five months away under plans promoted by legislative leaders, Gov. Gavin Newsom warned, as he argued that his contentious plan linking financial relief to car ownership is the quickest alternative to landing money back in wallets.

In a recent interview with the Bay Area News Group editorial board, Newsom criticized California’s Democratic leadership for outlining a plan that would funnel $8 billion through the Franchise Tax Board, which he said could add months to the refund timeline. Under that proposal, taxpayers making up to $125,000 would see $200 checks with an additional $200 for each child or other dependent.

“FTB can’t get the money out quickly, because they’re in the middle of tax refund season,” Newsom said, adding that refunds would start in late September and could span all the way into next spring. “My sense was, people may get a little cranky about that. They may want a little quicker relief.”

The wrangling between Democrats — who hold a supermajority in the legislature — over how to give Californians relief at the gas pump has dragged on for weeks as gas prices have remained well over $5 a gallon for the past two months. Democratic leadership and the governor remain at loggerheads over whether the money should be going to all residents at all income levels, as Newsom has proposed, or be targeted toward people in greater need.

Newsom has proposed $400 for each vehicle Californians own, capped at $800 for two vehicles, totaling $11 billion in rebates. Under Newsom’s plan, the Department of Motor Vehicles — not the Franchise Tax Board — would be responsible for distributing debit cards that could start hitting mailboxes “earlier in the summer,” the governor said.

Newsom said the two-vehicle rebate cap would prevent “people with 23 Teslas” from exploiting the state’s generosity. But Newsom said that this rebate should include higher-income earners who were left out of the previous stimulus check that was limited to people earning $75,000 or less.

“We want to acknowledge that the middle class felt a little left out of the last one,” said Newsom.

The governor has also called for public transit grants as part of his proposal to allow transit agencies to provide free rides for three months.

Negotiations between key legislators and the governor are taking place ahead of a highly-anticipated May budget revision out next week. The revision will provide an updated picture of how much money the state has and how Newsom wants to spend it before all parties need to finalize a budget in June.

According to the latest figures, the Golden State is now estimated to have a booming $68 billion surplus. A 1979 spending cap requires Sacramento to send some of this money back to taxpayers or spend it on select categories, including education and infrastructure.

A Valero gas station in Sacramento on March 10, 2022. (Miguel Gutierrez Jr., CalMatters)
A Valero gas station in Sacramento on March 10, 2022. (Miguel Gutierrez Jr., CalMatters) 

In a short statement to the Bay Area News Group, Senate President Pro Tem Toni Atkins and Assembly Speaker Anthony Rendon said they are working to provide taxpayers with speedy financial relief, although they did not directly address Newsom’s criticism.

“We have been clear from the first conversations on this issue that the Legislature wants to help as many people as we can, as quickly as possible,” the Democratic leaders said.

Scott Graves, research director at the California Budget & Policy Center, an organization advocating for low-income residents, said Newsom should not look to the DMV’s cumbersome bureaucracy when the state already relied on the Franchise Tax Board to target billions of dollars in relief payments to families.

“Let’s not reinvent the wheel,” said Graves. “Let’s use a proven pathway that we already used last year to efficiently get money out the door to Californians who really need it.”

The average price for a gallon of regular in California topped $5.76 on Thursday and was even higher in the Bay Area. Regardless of gas relief checks, drivers should expect to pay around 3 cents more per gallon come July 1 due to an inflationary increase to the gas tax that is currently pegged at 51 cents a gallon. Newsom had sought to pause the increase, but the legislature failed to meet a deadline last week to do so.

Click here to read the full article at the Mercury News

A $400 Gas Rebate May Be Ahead

Lawmakers’ proposal comes amid pressure to help Californians facing high prices.

SACRAMENTO — A group of Democratic state lawmakers on Wednesday called for sending a $400 rebate to every California taxpayer to help soften the blow of the recent surge in gasoline prices.

The proposal comes as pressure mounts to help Californians struggling with prices at the pump as well as increases in the costs of food, rent and other essentials. Republican lawmakers have been pushing to temporarily suspend the state’s highest-in-the-nation gas tax — 51 cents per gallon — but that appears unlikely because of opposition from Democratic legislative leadership.

“This proposed $400 rebate would cover the current 51 cents-per-gallon gas tax for one full year, 52 trips to the pump for most vehicles,” the lawmakers wrote in a letter to Gov. Gavin Newsom, Assembly Speaker Anthony Rendon (D-Lakewood) and Senate President Pro Tem Toni Atkins (D-San Diego).

“Notably, we believe a rebate is a better approach than suspending the gas tax — which would severely impact funding for important transportation projects and offers no guarantee that oil companies would pass on the savings to consumers,” said the letter, obtained by The Times on Wednesday.

The governor has been working with the Legislature to craft a tax relief package after promising in his State of the State address last week to put money “back in the pockets” of Californians who have been stung financially by the sharp rise in gas prices.

Newsom administration officials have said several ideas are under consideration, although suspending or reducing the state gas tax does not seem likely. Rendon and Atkins released a joint statement last week dousing the idea, saying it would not provide substantial assistance and could reduce funding for crucial road and bridge repairs statewide. Instead, they favored general tax relief to help Californians struggling with rising costs — not only for gas but for food, rent and other life essentials.

The proposal announced Wednesday came from a group of 10 Democrats — Assemblymembers Cottie Petrie-Norris of Laguna Beach, Cecilia Aguiar-Curry of Winters, Rebecca Bauer-Kahan of Orinda, Jesse Gabriel of Encino, Adam Gray of Merced, Jacqui Irwin of Thousand Oaks, Evan Low of Campbell, Blanca Rubio of Baldwin Park, Sharon Quirk-Silva of Fullerton and Carlos Villapudua of Stockton — and one independent, Assemblymember Chad Mayes of Yucca Valley.

Several of the lawmakers are generally viewed as business-aligned moderates in the Assembly Democratic caucus. They have scheduled a Thursday news conference to provide more details.

Republican leaders quickly threw their support behind the measure, though they still vowed to push for suspending the gas tax.

“This bill should be fast-tracked to the Governor’s desk and targeted to working Californians who actually feel the pain at the pump,” Assembly Republican Leader James Gallagher of Yuba City said in a statement Wednesday evening.

The proposal, the lawmakers said in their letter to Newsom, should be considered as part of the state budget negotiations that will begin in late spring. Early estimates of the size of California’s tax surplus have varied and won’t become more clear until after taxpayers file their returns by next month. Even so, most estimates have been far larger than the projected $9-billion cost of the Democratic effort.

Click here to read the full article at LA Times

What About Rebate Checks? Democrats Want to Spend California’s Surplus on Infrastructure

State lawmakers want to use a projected $31 billion surplus to fuel an infrastructure boom, a tactic that could reduce the amount Californians might see in any rebate checks this year – if they happen at all.

The state expects to have so much money it risks exceeding a state spending threshold called the Gann Limit. If it does, it must send more money to schools and some money back to taxpayers through rebates.

Top Democratic lawmakers who control the budget process in Sacramento said they intend to reduce the amount they exceed the limit in part by spending a big chunk of the projected surplus on infrastructure.

Assemblyman Phil Ting, who runs the Assembly Budget Committee, said he wants to spend a “significant portion” of the surplus on infrastructure, including $10 billion for school facilities and $10 billion for transportation projects.

That would, in theory, mean lawmakers wouldn’t have to send as much money back to taxpayers in the form of rebate checks, though they could still send stimulus checks anyway, regardless of whether they exceed the state spending limit. Stimulus checks are still on the table, said Ting, D-San Francisco, depending feedback lawmakers receive from their constituents.

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Although he expects rebates to be discussed in budget negotiations, Sen. Scott Wiener said he thinks the state needs to prioritize infrastructure spending.

“We’ll have some critical needs around infrastructure that need to be prioritized,” the San Francisco Democrat said. “If you’re sending rebates back instead of bolstering water systems and addressing sea level rise… you’re still shortchanging taxpayers.”

Assemblyman Vince Fong, the top Republican on the Assembly Budget Committee, said he supports spending surplus money on infrastructure, but said the budget should also include tax relief.

“There needs to be infrastructure investment in water storage and at our ports, but we have to realize our businesses are overtaxed,” the Bakersfield Republican said. “We have to look at providing permanent tax relief.”

State budget spending on infrastructure will be on top of billions in federal infrastructure money recently approved by President Joe Biden, which U.S. Transportation Secretary Pete Buttigieg told the Sacramento Press Club on Thursday will fund a range of different projects.

“We’re talking about roads and bridges, we’re talking about rail, transit, buses, talking about ports, and airports, talking about water and internet access,” Buttigieg said.

Ting said he wants lawmakers to use the state surplus for drought resilience projects and broadband expansion to communities without reliable internet access. He also called for more spending on housing and homeless aid.

Wiener, who chairs the Senate’s Housing Committee, said he also supports spending more on housing and homeless programs.

Senate leaders say they hope to build on targeted tax relief programs such as the California Earned Income Tax Credit, known as CalEITC, the Child Tax Credit, and Small Business Relief.

This is the second year in a row California revenues have come close to triggering Gann Limit requirements. Senate Democrats have yet to name specific proposals for next year’s budget, but in a set of early goals said they’d like to consider reforms to “modernize the Gann Limit while respecting original intent.”

In a statement, state Sen. Nancy Skinner, D-Berkeley and chair of the Senate Budget Committee, said the state’s surplus should be used to built a more equitable economy.

“Moving toward an equitable economy for all requires increased investments in affordable housing, our essential workforce, infrastructure at schools and colleges and protecting the climate,” Skinner said. “Fortunately, we have the opportunity to make such investments while we continue supporting small businesses and those Californians still struggling.”

State Sen. Jim Nielsen, R-Red Bluff, criticized what he said were Democratic efforts to evade rebates under the Gann Limit in the past.

Nielsen, vice chair of the Senate Budget Committee, expressed skepticism about Democrats’ plans to “modernize” the Gann Limit.

“Their intent is not to revise and reform it,” he said. “Their intent is to destroy it.”

Nielsen said the state’s surplus should be spent on infrastructure to prevent forest fires and the Sites Reservoir in Colusa County to supply water during droughts. Lawmakers also need to make public safety a priority in next year’s budget, he said, noting recent “smash-and-grab” robberies affecting retail.

Expanding the state’s low-income health insurance program to more undocumented immigrants will also be up for consideration. Currently, the program excludes undocumented people ages 27-49. Ting said he supports expanding it to everyone, but it isn’t clear yet that there will be enough money to do it in the next budget.

Lawmakers’ overarching goal is to ensure regular people feel the benefits of the strong economy that has netted the state such a windfall of cash, Ting told reporters at a press conference.

“The budget remains strong, yet if you talk to individual Californians they are very pessimistic and don’t feel the benefits,” he said.

Click here to read the full article at Fresno Bee