SAN JOSE, Calif. — 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.
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.
Republicans, who are a tiny minority in the legislature, have called for immediate relief by suspending the state’s entire 51-cent gas tax. Democratic leaders rejected that proposal, saying it would upend funding for roadway improvements and benefit oil companies, but last week a small bipartisan group of lawmakers also called on the state to suspend the gas tax for 12 months.
Among them is Assemblywoman Cottie Petrie-Norris, a Democrat who narrowly won her Orange County district in 2020. Petrie-Norris also proposed a $400 relief plan in March.
“Everyone is experiencing pain at the pump. I think it’s appropriate for us to provide a broad-based gas rebate to Californians,” said Petrie-Norris, adding that a “key source of the divide right now” is whether to target funds towards the state’s lower-income brackets.
Dan Schnur, a politics professor at USC and UC Berkeley, said the negotiations touch on thorny issues of how to prioritize relief to drivers feeling the sting of gas hikes, while not upending legislators’ climate goals.
“Gasoline isn’t the only thing that’s becoming more expensive. But we don’t drive past large signs reminding us how expensive bread or milk or rent has become,” said Schnur. “Voters are more attuned to gasoline prices than other impacts, so it’s not surprising that Newsom wants to address their greatest concern.”
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