California governor proposes tax rebate as virus relief

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FILE – In this April 23, 2021, file photo, California Gov. Gavin Newsom speaks during a press conference in Big Sur, Calif. A California appeals court has upheld Newsom’s emergency powers during the coronavirus pandemic. The 3rd District Court of Appeal in Sacramento ruled Wednesday, May 5, 2021, for the Democratic governor in a lawsuit brought by two Republican lawmakers. (AP Photo/Nic Coury, File)

SACRAMENTO, Calif. (AP) — Millions of poor and middle-class Californians would get tax rebates of up to $1,100 under a proposal unveiled Monday by Democratic Gov. Gavin Newsom, as part of a broader pandemic recovery plan made possible by an eye-popping $75 billion budget surplus.

Taxpayers making between $30,000 and $75,000 a year would get a $600 payment. Households making up to $75,000 with at least one child, including immigrants in the country illegally who file taxes, would get an extra $500 payment.

“We believe people are better suited than we are to make determinations for themselves on how best to use these dollars,” Newsom said during an event in Oakland to announce the plan.

The massive budget surplus is largely due to taxes paid by rich Californians who generally did well during the pandemic, and marks a major turnaround after officials last year said they feared a deficit of more than $50 billion.

The payments will total an estimated $8.1 billion, said H.D. Palmer, a spokesman for the state Department of Finance. The proposal also includes $5.2 billion to pay back rent and $2 billion for overdue utility bills for people who fell behind during the pandemic.

A law passed by voters in the 1970s requires the state to give some money back to taxpayers if the surplus hits a certain limit. The state estimates it will be $16 billion over that threshold. Newsom does not have to act immediately, but is choosing to do tax rebates now, Palmer said.

They are part of what Newsom is calling a $100 billion plan to boost the state’s economic recovery. He’ll be rolling out details of the plan all week ahead of releasing his revised state budget. The chairs of the state Senate and Assembly budget committees joined Newsom, indicating their support for a proposal that will go before overwhelmingly Democratic Legislature.

It comes as he faces a likely recall election later this year, and his Republican rivals quickly criticized the effort. Businessman John Cox, who campaigned alongside a bear last week for attention, accused Newsom of engaging in a publicity stunt.

“The governor’s got a lot of money to hand out. And of course, he’s worried about his own neck,” Cox said at a campaign event in Los Angeles.

He and Kevin Faulconer, another Republican candidate, both said a one-time infusion of cash wouldn’t solve California’s problems.

“Californians need permanent, real tax relief, not just one-time stimulus checks,” Faulconer, the former San Diego mayor, said in a statement.

It’s the second round of cash payments given by the state in response to the pandemic. Earlier this year, people making less than $30,000 got a $600 payment. Immigrants making up to $75,000 who file taxes, including those also living in the country illegally, also got the check. State officials chose a higher eligibility limit for those people because they didn’t get federal stimulus checks.

All combined, the state would spend $11.9 billion on direct cash payments.

Democratic Assemblyman Phil Ting, the chamber’s budget chair, said the state has the ability to help the neediest people because of how well wealthier Californians did during the pandemic. The state’s budget relies heavily on personal income tax from high earners.

“That budget surplus is going right back to the most vulnerable Californians, the ones who need help the most,” he said.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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