SACRAMENTO, Calif. — On Wednesday, a group of Democratic state lawmakers proposed sending a $400 rebate to every California taxpayer to help alleviate the sting of the recent increase in fuel prices.
The plan comes as demand rises to assist Californians who are dealing with high gas prices, as well as hikes in the costs of food, housing, and other everyday necessities. Republican legislators have been trying to temporarily suspend the state’s highest-in-the-nation gas tax — 51 cents a gallon — but that appears unlikely due to Democratic legislative leadership opposition.
“This proposed $400 rebate would cover the current 51 cents-per-gallon gas tax for one full year, or 52 visits to the pump for most automobiles,” the legislators wrote in a letter to Gov. Gavin Newsom, Assembly Speaker Anthony Rendon (D-Lakewood), and Senate President Pro Tem Toni Atkins (D-San Diego).
“Notably, we feel a refund is a better strategy than suspending the gas tax — which would adversely harm funding for critical transportation projects and offers no guarantee that oil firms would pass on the savings to consumers,” the letter, seen by The Times on Wednesday, stated.
ORANGE, CA: Juan Galaiviz, of Santa Ana, fills up his car with petrol at the Chevron gas station on Katella Ave. and Glassell in Orange, CA on Tuesday, March 8, 2022. Galaiviz spent $50.00 on normal gasoline (8.866 litres). Juan travelled from Santa Ana to Orange since it was less expensive. In Los Angeles County, the average price of a gallon of self-serve regular gasoline jumped 8.9 cents Thursday, marking the 30th record in 32 days. Orange County’s average price jumped 8.8 cents, setting a new record for the 29th time in 34 days.
Newsom promised to address the state of California’s high gas prices. However, the politics are complicated.
After promising in his State of the State address last week to put money “back in the wallets” of Californians who have been financially stung by the dramatic jump in gas prices, the governor has been working with the Legislature to design a tax relief package.
According to Newsom administration officials, numerous proposals are being considered, however suspending or lowering the state gas tax does not appear realistic. Rendon and Atkins issued a joint statement last week dismissing the notion, claiming that it would not give significant assistance and may diminish funds for critical road and bridge repairs across the state. Instead, they advocated for broad tax relief to assist Californians grappling with growing prices – not only for petrol, but also for food, housing, and other necessities.
The proposal was announced Wednesday by a group of ten Democrats — Assemblymembers Cottie Petrie-Norris of Laguna Beach, Cecilia Aguiar-Curry of Winters, Rebecca Bauer-Kahan of Orinda, Jesse Gabriel of Encino, Adam Gray of Merced, Jacqui Irwin of Thousand Oaks, Evan Low of Campbell, Blanca Rubio of Baldwin Park, Sharon Quirk-Silva of Fullerton, and Carlos Villapudua
Several of the MPs in the Assembly Democratic caucus are widely regarded as business-aligned moderates. More information will be provided at a press conference on Thursday.
Republican leaders swiftly backed the bill, while they vowed to continue pushing for the suspension of the gas tax.
“This law should be fast-tracked to the Governor’s desk and targeted to working Californians who genuinely feel the pain at the pump,” Assembly Republican Leader James Gallagher of Yuba City said Wednesday evening in a statement.
According to the lawmakers’ letter to Newsom, the plan should be examined as part of the state budget deliberations, which will begin in late April. Estimates of the magnitude of California’s tax surplus have varied, and it won’t be clearer until people file their forms next month. Nonetheless, most estimates have been substantially higher than the Democratic effort’s predicted $9 billion cost.
Despite politicians’ emphasis on the benefit to all taxpayers, including those without legal immigrant status, California’s tax structure is heavily skewed toward high-income individuals. According to data published by the state Franchise Tax Board, nearly one in every four tax returns filed in 2019 were from taxpayers with an annual adjusted gross income of more than $100,000.
Using 2019 figures, more than 1.4 million taxpayers earning more than $200,000 per year would be eligible for $400 rebates under the plan, which would cost about $567 million. More recent tax data may raise the total amount of the rebate available to high-income taxpayers.
If Newsom accepts and signs the proposal, it will be the closest any current endeavour has gotten to achieving the promise of California’s voter-approved government spending limit. When revenues grow faster than most general government spending over a two-year period, the 1979 law demands a combination of taxpayer rebates and new school financing. Analysts predict that the state will exceed its expenditure cap by next year. Democrats avoided sending out blanket rebates last year by instead spending nearly $12 billion on a COVID-19 pandemic stimulus programme open to Californians earning $70,000 or less every year.
In 2017, the Democrat-controlled Legislature approved Senate Bill 1, which then-Gov. Jerry Brown signed into law, imposing the state’s first gas tax increase in 23 years – 12 cents per gallon — to fund road and bridge repairs. According to the law, the tax is raised on July 1 of each year depending on the growth of the California consumer price index.