Gov. Newsom, Legislative Leaders Announce $17 Billion Inflation Relief Package

Governor Gavin Newsom, Senate President pro Tempore Toni G. Atkins (D-San Diego) and Assembly Speaker Anthony Rendon (D-Lakewood) came to an agreement on the upcoming state budget on Sunday, approving a $17 billion inflation relief package that includes payments as much as $1,050 for 23 million Californians.

Tax refunds and rebates for Californians had been on the table for the budget since March, following Governor Newsom proposing $400 direct relief checks for all car owners in the state. The May budget revision had cemented the plan as part of his final budget proposal last month. However, Newsom’s $18.1 billion program aimed at gas and inflation relief was soon at odds with the legislatures, who proposed a program that would give flat rebates going to all Californians under a certain maximum income amount and not based on car-ownership.

The sides finally reached an agreement on Sunday. According to the new $17 billion inflation relief package, approximately 23 million Californians will get a special tax refund. According to the agreed-upon package, those making up to $75,000 a year, or joint filers who make up to $150,000, will get $350 each. Those who make up to $125,000 a year, or joint filers making up to $250,000, will get $250 each. Those who make up to $250,000 a year, or $500,000 filing jointly, get $200 each. One dependent may also be added at each tier for the same amount as each filer, meaning Californians could see as much $1,050, $750, or $600 coming in per household depending on tier level.

“California’s budget addresses the state’s most pressing needs, and prioritizes getting dollars back into the pockets of millions of Californians who are grappling with global inflation and rising prices of everything from gas to groceries,” said the three lawmakers in a statement on Sunday. “The centerpiece of the agreement, a $17 billion inflation relief package, will offer tax refunds to millions of working Californians. Twenty-three million Californians will benefit from direct payments of up to $1,050. The package will also include a suspension of the state sales tax on diesel, and additional funds to help people pay their rent and utility bills.”

Governor Newsom specifically called this program a “middle class tax rebate” specifically designed for higher prices of gas and other expenses.

NEW: Millions of Californians will be receiving up to $1,050 as part of a NEW middle class tax rebate.

That’s more money in your pocket to help you fill your gas tank and put food on the table.

— Gavin Newsom (@GavinNewsom) June 27, 2022

The $17 billion inflation relief package, which also includes rent assistance programs, utility assistance programs, and a temporary halt to the state diesel tax, will come directly from the $97.5 billion budget surplus. Those who make more than $250,000, or joint filers who make $500,000 or more, will not be eligible to receive the rebates. Once approved as part of the state budget, funds will go out either in direct deposit form or debit card form by late October.

With the largest hurdle to a 2022-2023 state budget agreement now tentatively resolved, many have noted that the compromise on relief payments are likely to leave taxpayers with mixed feelings.

“First of all, people need that money as soon as possible as bills and gas costs continue to rack up,” explained Adam Mendoza, a Los Angeles-based pollster who is currently focusing on public opinion on next years budget, to the Globe on Monday. “Not in October four, five months after the fact. Now.”

“Second of all, they haven’t been explaining how the other programs here will help. Like the diesel tax. People we’ve been talking to this morning want a full gas tax halt, like what the Republicans proposed earlier this year. That made the most sense to people. Get rid of the gas tax for six months, use the surplus to pay for infrastructure that would have been covered by it, and boom. Savings at the pump with no decline in services. But instead we went the ‘free money’ approach.”

“Third, people would rather have direct deposits and checks rather than debit cards. People absolutely hate debit card payments. You would not believe the hatred we hear about them during polls when it comes up, like from other state programs that utilizes them. They want the money, not a little plastic card.”

“And this maybe a little bit of a tangent, but we’ve been finding that people are reacting more and more negatively when politicians use the phrase ‘more money in your pocket’ or something to that effect. Not only do most people not keep physical money in their pocket anymore making it redundant, but they have been using that wordage for so long it is starting to take on a more and more negative connotation, because it feels like people are getting scammed whenever it is said.”

“And Newsom, Atkins, and Rendon have been throwing that phrase around over this, so some anger stemming from this comes right down to that word usage too. My favorite response to this was when one person we polled, a former government worker at that, said that if she hears that phrase one more time that she is, quote ‘going to scream.’ Minor detail, but it shows how upset some really are.”

“So, while people are in the end happy to be getting money back from the state, they don’t like the long wait, how it doesn’t include many groups of people like high earners and those living on the street, how the state ignored other avenues to help Californians out, how the payment is coming, or even how they announced it. They made it to the finish line, but they crashed into and tripped over a lot of hurdles on the way here.”

Governor Newsom must sign in the states next spending plan by June 30th, in time for the next fiscal year to start on July 1st.