California Politics: So many cash rebate plans in Sacramento

The California State Capitol in Sacramento.
(Gary Coronado / Los Angeles Times)

By the time California’s budget plans are squared away in July, one thing is almost certain: Billions of dollars in excess tax revenues are going back into the pockets of some of the state’s residents.

The fact that a huge tax rebate is both doable and broadly supported says a lot about how much has changed in Sacramento over the past decade. Hardly any members of the Legislature have been around long enough to remember the anguish and anger of the state’s deficit-ridden past.

Instead, it’s an era of plenty. Under a new estimate released Thursday, the state may have close to $70 billion by next summer in unallocated, discretionary funds — and that’s after setting aside revenues earmarked for public schools and the state’s main cash reserve. (These numbers, once adjusted for final data on April tax collections, could go up.)

It’s sparked an interesting debate about not only which Californians deserve a stipend but whether the state’s response to high gas prices and rising inflation should provide temporary help pretty much across the board.

Four ideas for handing out cash

Two new proposals for sending out rebate checks landed at the statehouse Thursday, joining the fray with Newsom’s plan and another legislative effort, both unveiled in March.


The four efforts all fall within a relatively narrow range in terms of cost, with price tags between $8 billion and $9 billion. All are also one-time deals, although the proposal announced Thursday by a bipartisan group of legislators draws out the length of overall benefit by suspending the state’s excise tax on gasoline for a year. The other three plans would give Californians a single, lump-sum cash payment.

Two of the legislative plans would broadly dole out money to taxpayers, while Newsom’s version seeks to attach the rebate to vehicle ownership. The bipartisan relief would presumably be aimed at anyone who pays for gas at the pump in California, regardless of residency or whose car is being fueled.

(Senate Republicans wanted it known Thursday that they had suggested the same gas-tax-holiday idea last year that’s now been embraced by the partisan group.)

Senate Democrats, building on an idea floated in March by the party’s leaders in both houses, have offered the only plan that fully takes into account a person’s wealth — offering $200 per family member payments to jointly filed tax returns showing an adjusted annual income of no more than $250,000. Newsom would limit any one person to receiving two $400 vehicle rebates. The other two ideas floated in the Legislature have no income requirements for eligibility.

Timing and impacts are big issues

None of the efforts seem to have the urgency some Californians might have expected. It’s been more than seven weeks since Newsom hinted at a gas tax rebate in his State of the State address, unveiling the details two weeks later. The first legislative effort was suggested about six weeks ago.

Gas prices have tapered off some since the conversation began. The latest AAA survey shows a 23-cent drop in the average price of a regular gallon of gas in California compared with one month earlier.


Nor would things change quickly under the effort to suspend the state’s existing 51-cents-per-gallon excise tax on gasoline. A Newsom administration official pointed out Thursday the 60-day implementation period for any changes to the gas excise tax — and that clock would begin once any such proposal was signed into law.

And there’s the issue of impact and whether drivers — no matter how carefully screened for equity issues — are the only Californians entitled to relief. Newsom’s proposal included public transit and an expedited investment in zero-emission vehicles and charging stations.

Senate Democrats went much further on Thursday, promising up to a decade’s worth of subsidies for small businesses facing higher payroll taxes and billions of dollars for child care and social services needs as well as record amounts stashed away in “rainy day” funds for schools and safety net programs.

And now, a reality check: Nothing will move forward before Newsom unveils his revised state budget in a couple of weeks. That makes this a topic that’s unlikely to see much real action before late May or early June, at best.

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California politics lightning round

— With the threat of power shortages looming and the climate crisis worsening, Newsom may attempt to delay the long-planned closure of California’s largest electricity source: the Diablo Canyon nuclear plant.


— Cash payments in California medical malpractice cases would go up for the first time in nearly five decades under a deal between rival interest groups announced Wednesday that avoids a costly battle at the ballot box in November.

— An ambitious legislative effort to shut down three offshore oil rigs along the Orange County coast, where beaches and fragile wetlands were soiled after a major spill in October, could be hobbled by concerns over the eventual cost to California taxpayers.

— Battle lines have emerged in the debate over Newsom’s far-reaching and controversial effort to provide court-ordered treatment for homeless individuals with severe mental illness, with Democrats and local government officials divided.

— The California Republican Party endorsed state Sen. Brian Dahle for governor on Sunday, a contentious battle that was not without controversy after the Assembly campaign committee of Dahle’s wife transferred $40,500 to the state party on Friday.

— The most contentious and closely watched California election in 2022 is likely to be the race for attorney general, where voters will choose in June from the liberal incumbent who was appointed to the job last year, three unheralded challengers and an openly gay career prosecutor whose campaign could hinge on the public’s new fears about crime.

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