California residents could get free public transit rides and gas rebates under a proposal from the governor to help bring relief as fuel prices in the state reach record highs.
Gavin Newsom’s plan is the latest floated by officials in California, where drivers are paying more for fuel than anywhere else in the country.
US gas prices have started to slowly fall after reaching record levels in recent weeks, surging in part because of pandemic-induced inflation and Russia’s invasion of Ukraine. But prices in the Golden state have continued to trend upward, and California drivers are now paying an average of $5.88 a gallon, according to AAA.
Here’s what we know about the governor’s proposal:
What is Newsom’s plan?
The Democratic governor has proposed giving all drivers in the state $400 debit cards for up to two vehicles, amounting to a total of $800. Anyone who has a car registered in California would receive the money, regardless of income, immigration status or whether or not their vehicles use gasoline.
Newsom wants to give $750m to transit and rail agencies to cover bus or train fare for Californians who do not own cars. That funding would would cover the costs for free rides for 3 million people a day for three months, the governor said.
The plan also includes $1.1bn to pause scheduled inflationary increases for diesel and fuel taxes this summer, and $500m for projects that promote biking and walking.
Why is Newsom doing this?
California’s gas prices are consistently the highest in the nation. On Wednesday, the state’s average gas prices hit a new record at $5.88 a gallon, more than $2 higher than it was a year ago, according to AAA.
The high fuel costs are hitting residents hard, particularly gig workers for whom fuel makes up a large part of their daily costs.
Giving money directly to taxpayers would provide relief and allow Newsom to avoid suspending the state’s gas tax as other states have done. California’s gas tax is the second-highest in the US at 51 cents a gallon, but Democratic leaders have been wary of pausing it as they fear oil companies would not pass the savings along to drivers.
What are the criticisms?
Republican lawmakers in the state have urged Newsom to suspend California’s gas tax in order to provide immediate relief to drivers. Newsom’s proposal will take time to deliver – the governor’s office has said people could see rebates by July.
“People need relief now,” said James Gallagher, the assembly Republican leader. “We’ve got now, like, four different competing plans amongst the Democrats. These guys are going to negotiate against themselves for weeks to months and who knows what we’re going to get.”
Meanwhile, Democrats have concerns about providing assistance to all Californians with registered vehicles, regardless of their income. Democratic leaders have been discussing their own proposal, which would give $200 rebates to every taxpayer and their children with taxable income less than $125,000 for single filers and $250,000 for joint filers.
Rising fuel prices pose a policy challenge for Newsom as he tries to wean the state off fossil fuels. He has signed executive orders aimed at banning the sale of new gas-powered cars in the state by 2035 and halting all oil extraction by 2045.
Laura Deehan with Environment California, a nonprofit that advocates for an end to fossil fuel use, was critical of Newsom’s effort, and said that giving people money for gas would encourage them to drive more. Instead, the governor should use the $9bn on programs aimed at getting people out of gas-guzzling cars, she said.
“Just giving out these rebates to anyone who has a car in the state isn’t going to help us in the long run move away from the volatility that comes with our dependence on fossil fuels,” she said.
What happens next?
The state legislature, where Democrats dominate both the assembly and the senate, must approve the plan. Newsom’s office said the governor would be willing to negotiate with lawmakers about who can get the money, a process that could take time to sort out.
A moderate Democrat who supported a separately proposed plan to give every taxpayer $400 has indicated they would back Newsom’s effort and urged the legislature and governor to act quickly.
“The contours of the governor’s proposal are a little different than what we proposed, but I would be very happy to support this,” said Cottie Petrie-Norris, a Democratic assembly member from Laguna Beach.
What’s happening elsewhere in the US?
With prices for fuel and other essentials soaring across the US, states are considering giving rebate checks directly to taxpayers as well as cutting sales taxes, offering property tax relief and reducing or suspending state gas taxes.
The proposals come as many states have more funding than usual thanks to billions of dollars in federal pandemic aid and ballooning tax revenue.
Janet Mills, Maine’s governor, wants to send $850 to most residents in the state to help with fuel costs and inflation. New Mexico’s governor recently signed off on a tax package that will give some taxpayers $250 checks, which lawmakers say will help with high gas prices.
Maryland’s governor has signed a law temporarily suspending the state’s gas tax; Georgia has done the same while also offering $1.1bn in refunds to taxpayers. In Illinois, the governor has proposed halting a 2.2-cent increase in the motor fuel tax, suspending a 1% grocery sales tax for a year and providing a property tax rebate of up to $300.
