California's $75.7 billion budget surplus may be used in part to provide stimulus checks to residents earning less than $75,000.
Gov. Gavin Newsom proposed spending $11.9 billion, triple the size of the Golden State stimulus package he signed in February, and providing $600 stimulus checks to two-thirds of Californians and an additional $500 to families with children.
“We are doing the largest rebate in history, because we think people are better suited than we are to determine what they need,” he said.
The plan outlined Monday is part of a $100 billion economic recovery package Newsom called “the biggest state tax rebate in American history.” It would build on the expanded child tax credit in the recent federal stimulus package.
In addition to the surplus, the state will receive $26 billion from the federal government’s rescue package signed by President Joe Biden in March, but Newsom’s proposal didn’t outline how that would be spent.
Newsom, who is facing a recall election, said the payments would target middle-class and lower-income residents, going to people who make less than $75,000 a year.
Republican John Cox, who lost to Newsom in the gubernatorial election and is running in the recall election, said in a statement that Newsom is missing an opportunity to make "beastly, structural changes" that would slash taxes and make California permanently more affordable.
The governor announced $5.2 billion in rental assistance, building on the $2.6 billion of such aid announced in February. The money would also help renters with overdue water and electricity bills. Newsom had announced in a Mother's Day video with first partner, Jennifer Siebel, that he will ask the Legislature to add 100,000 slots in child care across the state.
Newsom said he will be making announcements of other expenditure plans each day of the week leading up to the formal announcement of his May budget revisions Friday. The annual May revise launches formal budget negotiations in the Legislature ahead of the June 15 passage deadline.
The proposal comes after the state experienced a surplus larger than projected in January's draft budget proposal. The Legislature may have different ideas about how to spend the surplus.
“This proposal from the administration requires approval from the Legislature, which is why it’s humbling to have the budget chairs here,” Newsom said. “I am mindful that our values are aligned and that has been demonstrable in the last several months with the actions we have taken.”
The Legislature’s budget chairs, Assemblymember Phil Ting, D-San Francisco, and Sen. Nancy Skinner, D-Berkeley, supported the governor’s plans in their remarks at the press conference.
“Most of the state’s revenue comes from the top 1% and from gains in the stock market,” Skinner said. “So, we have money — and unlike other states, we are using that money to support many Californians who have been hurt by the pandemic.”
The state’s progressive tax policy that has led to the surplus will enable lawmakers to create a budget “that will build not just the California of next year, but for the next 100 years,” Ting said.
The announcement has nothing to do with the Gann limit established in 1979, which requires the state to return half of a surplus over a certain amount to taxpayers and give half to the schools, Newsom said. He added, lawmakers would not know until later in the year if that ceiling has been triggered.
"It is likely we will hit that limit," Newsom said. "This isn't because of Gann. It's because the middle class and working moms have been hit hard by this pandemic."
