California Governor Gavin Newsom announced his $11 billion gas rebate tax refund plan on Wednesday, focusing refund efforts toward more car owners in the state rather than previous proposals that targeted taxpayers in general.
Under Governor Newsom’s proposal, $9 billion of his $11 billion package would go to vehicle owners. Californians with registered vehicles will receive $400 for each vehicle in the form of debit cards, with owners capped at two vehicles each. Newsom’s office calculated that the average California driver spends about $300 in gasoline excise taxes a year, allowing for extra in case of longer-term high gas costs. Program eligibility is based on vehicle registration and not tax records to help include those on Social Security Disability Income (SSDI) and those with low-incomes who own cars. While there is a cap on the number of cars, Newsom did not include an income cap, meaning that all Californians who own cars are eligible.
We’re proposing $9 billion in tax refunds to address rising gas prices — $400 per registered vehicle, up to 2 per person. We’re also proposing grants so public transit can be free for 3 months.
We know Californians are paying at the pump & with this refund, millions get $ back. pic.twitter.com/fNZOT3ds4S
— Office of the Governor of California (@CAgovernor) March 23, 2022
Non-vehicle owners would see some relief in other parts of Newsom’s proposed package as well. $750 million in grants would go to transit and rail agencies across the state to provide free public transportation for all riders. The 3 million public transit riders in California would not need to pay fares for three months as a result. Another $500 million would go to promoting walking and biking as alternative forms of moving around.
Finally, Newsom would also push funds to pausing certain fuel taxes. Up to $600 million would be spent on pausing part of the sales tax rate on diesel fuel for a year to assist truckers, with $523 million going to pause inflation adjustments on gas and diesel excise taxes.
While not part of the $11 billion package, also tied into Newsom’s proposal is the fast tracking of $1.5 billion in funds that go to electric car-infrastructure projects.
“We’re taking immediate action to get money directly into the pockets of Californians who are facing higher gas prices as a direct result of Putin’s invasion of Ukraine,” Governor Newsom said in a Wednesday statement. “But this package is also focused on protecting people from volatile gas prices, and advancing clean transportation – providing three months of free public transportation, fast-tracking electric vehicle incentives and charging stations, and new funding for local biking and walking projects.”
The fourth gas tax/rebate proposal this month
Newsom’s proposal became the 4th, and most expensive proposal, to be released since the Russian invasion of Ukraine in late February. The GOP’s $6 billion proposal, AB 1638, which would have removed the state’s 51 cent gas tax for a period of six months, was rejected in the Assembly earlier this month. A $9 billion Assembly Democrat plan to give $400 tax rebates to all Californian taxpayers regardless of car ownership status, is currently under discussion in Sacramento, as is a join Assembly Speaker Anthony Rendon (D-Lakewood)-Senator Toni Atkins (D-San Diego) plan worth $6.2 billion that would give $200 rebates to all Californians taxpayers except the wealthiest 10% of owners. All four proposals, including Newsom’s, rely on tapping into the projected $30 billion in projected state budget surplus funds.
However, Newsom’s proposal now becomes the most urgent to discuss due to upcoming state budget discussions and the Governor releasing his budget proposal first prior to the legislature.
“I appreciate Gov. Newsom’s work on developing another option to bring relief to Californians experiencing the rising cost of fuel and consumer goods,” expressed Senator Atkins on Wednesday. “The Senate is focused on ensuring that state money is targeted to those who actually need relief, and we look forward to working with Gov. Newsom, Speaker Rendon and our Legislative colleagues to quickly develop a proposal that delivers for struggling Californians.”
However, Speaker Rendon emphasized that he would not go along with any plans that gave rebates to the very wealthy and emphasized that all Californians were hurting due to high gas prices through public transit bus costs, prices at the store that rely on truck transportation, and other higher costs that come even without car ownership.
“A lot of people have suffered recently,” noted Rendon. “A lot of Californians have been struggling, and we’re looking for a solution to provide financial support for those Californians in particular.”
A question of who gets rebates, gas price relief
“It’s been a messy fight in California,” said John Kirsch, a transportation planner who focuses on gas and electric car recharging station placement in many Western states, to the Globe on Wednesday. “We’re helping some cities plan right now for new pumps and charging stations and a lot of them have been stalled because they need to know what the relief will be first before figuring out what they want to invest more in.”
“So, the Assembly plan would cover everyone, all tax-paying Californians, with $400 rebates, but it largely ignores that car owners have been the major ones hurt and most in need of the funds. The other one made by legislators, the one with $200 rebates, that’s even less fair because it excludes some taxpayers from receiving the money. You can argue that the rich don’t need a few hundred dollars, but they also paid in. It’s like unemployment or Social Security. Yeah, they have enough that they probably don’t need it, but they paid in too and have a right to their fair share.”
“The Governor’s plan is the most expensive but also oddly covers all the bases. Car owners get the biggest chunk by far with those rebates, but those who rely on other means would get free public transit fares. Store prices would also not be climbing as much with all those diesel tax stoppages. Even environmentalists get better electric car infrastructure funding and more bike path focus. But again, it’s 11 billion. That’s a huge thing he wants passed.”
“Objectively, the best plan has been the rejected plan. Getting rid of the gas tax allowed it to cut through all classes and income-levels. The 51 cent cut for six months would help out drivers directly, car owners directly, non-car owners through transit prices and store costs now that trucks don’t need to spend as much on gas or diesel. And, even more, it was only $6 billion.”
“Of the three remaining, Newsom’s is the most comprehensive, but it also costs a whole lot more, while both legislative ones have enough holes to sink an aircraft carrier. The most simple, sensible plan was just removed out of turn, in what looks like purely for politics because of their complaints that it would eat up the surplus, is now the backbone for funding for all three.”
“One thing is for certain. Everyone will be fighting for their piece of the pie on this for the next three or four months. Everyone wants to say that they did this for voters in the end.”
The final rebate plan is to be approved in the coming months, with lawmakers hope that the rebates in questions will go out starting in July.
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