On Monday, Democratic legislative leaders unveiled a $100 billion stimulus plan for Californians, potentially setting up small business protections, unemployment fund replacement, rent relief, and other divisive issues centering around the COVID-19 economic downturn.
Unemployment payment replacement in California
The $100 billion state plan will be largely contingent on what the second stimulus bill in Washington will cover. A large section of the California plan would be allocated to replacing the gap between the extra $600 a week currently available for unemployed people to what it will be set as after the additional benefit expires on Friday. While the Democratic-led House has already approved the extra $600 to be renewed into next year, the Republican-led Senate currently has a set limit in mind of an extra $200 a week to encourage workers to go back to work or find employment.
Should the Republican plan succeed, California, under their plan, would make up the extra $400 a week per person. Illegal immigrants who are also out of work and residing in California would also receive those benefits. If the Federal plan is not renewed or changed in time, and if California does not pass the Democrat’s plan, then average jobless payments in California will plummet to $338 a week.
Assembly Democrats have said that this is unacceptable and that millions of Californians would not be able to pay rent or mortgages, buy food, or pay for other necessities such as utilities without that extra $600 each week.
“We’re hearing from so many people that they’re one unemployment check away from getting evicted, from losing their home,” said Assemblyman Phil Ting (D-San Francisco), one of the authors of the California plan. “If we can forestall financial disaster for them, there’s a huge long-term benefit for those families, but also for the state.
“It is a huge economic stabilizer.”
Republicans have maintained that the extra $600 a month has kept unemployment rates high by de-incentivizing workers from re-entering the job market.
“It’s an extra $2,400 a month on top of a normal $1,200 a month in unemployment,” said “Max,” an aide in the State Capitol, to the California Globe. “That’s more than what people would make by working lower paying jobs here. We need to get the economy going again, so we need people to get out there and work. There are hard times now, but it won’t help anyone extending it out more than would be needed.”
Questions over ‘future tax vouchers’ and other pandemic related measures
Another measure under the plan would be “future tax vouchers” that would have taxpayers prepay their estimated taxes for a future tax year at a slight discount, allowing California to easily pay for the unexpected COVID-19 and unemployment costs now. Democrats behind this proposal said that wealthier people would be more inclined to do this, allowing the state to have more funds to get back on their feet and be strong enough in four years to take the projected tax loss from people paying early.
Other measures in the plan would cover housing, education, small businesses, and other currently struggling areas post COVID-19.
Eviction protection mixed with financial support for landlords and building owners would be included under the plan, as would funds to help schools reopen and expand internet access for students who cannot afford internet at home. Small businesses would see tax breaks and would allow for a delay in paying sales tax, as well as funds for California companies that make PPE equipment for the pandemic.
Earned-income tax credits would also be expanded.
Praise from Democrats, Skepticism from Republicans
The $100 billion needed would come from several sources. Pre-paid taxes would account for some of the funding, with most of the funding coming from borrowing against expected future revenue such as utility fees and cap-and-trade auctions. Certain programs could also be funded more directly, such as internet expansion for those who can’t afford it for distance learning being paid for by early telecommunication fee collections.
The gasoline tax would also be moved up to help pay for the program, adding about $5 billion more in revenue each fiscal year.
While many Democrats have been in favor of the plan, many prominent Democrats have yet to see or comment on it, including Governor Gavin Newsom.
“I’d be remiss to comment until I have a chance to review the details and happily will make our position well known,” said Governor Newsom on Monday. “We have to include a framework of bringing people along as we reopen our economy.”
Republicans who have yet to see the bill have also shown caution, noting that many other Democrat-led actions during the pandemic, such as earned income tax credits for illegal immigrants and the release of tens of thousands of prisoners from California prisons have been met negatively.
“They keep passing bills and doing things without thinking of the consequences,” continued Max. “We have a limited time for this plan of sorts, but we can’t rush it. People keep adding things into it and we seriously need to take a look at every piece to make sure that this will help people and businesses without dooming the state.”
“$100 billion is a lot of money here.”
The debate over the California plan is expected to intensify in August following the expected passage of the Federal Plan in Washington as any changes in the Federal Plan directly impact what California’s plan covers.
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