California taxpayers would get $400 rebate under new proposal

A group of Democratic state lawmakers on Wednesday called for a $400 rebate to be sent to every California taxpayer to help soften the blow from the recent spike in gasoline prices.

The proposal comes as pressure mounts to help Californians struggling with pump prices, as well as rising costs for food, rent and other necessities. Republican lawmakers have pushed to temporarily suspend the state’s highest gas tax — 51 cents per gallon — but that seems unlikely due to opposition from Democratic legislative leaders.

“This proposed $400 rebate would cover the current gasoline tax of 51 cents per gallon for a full year, 52 trips to the pump for most vehicles,” lawmakers wrote in a letter to Governor Gavin Newsom, the Assembly Speaker Anthony Rendon (D-Lakewood) and Senate Pro Tem Speaker Toni Atkins (D-San Diego).

“In particular, we believe that a refund is a better approach than suspending the gas tax – which would have a severe impact on the funding of important transport projects and offers no guarantee that oil companies will pass on. savings on consumers,” the letter, obtained by The Times, reads. Wednesday.

The governor has been working with the Legislature to craft a tax relief package after promising in his State of the State Address last week to put money ‘into the pockets’ of Californians who have been financially stung by the sharp rise in gas prices.

Newsom administration officials said several ideas are being considered, although suspending or reducing the state gasoline tax does not seem likely. Rendon and Atkins issued a joint statement last week stifling the idea, saying it would not provide substantial aid and could cut funding for crucial road and bridge repairs across the state. Instead, they favored general tax relief to help Californians struggling with rising costs — not just for gas, but also for food, rent and other life essentials.

The proposal announced Wednesday came from a group of 10 Democrats – Assembly members Cottie Petrie-Norris of Laguna Beach, Cecilia Aguiar-Curry of Winters, Rebecca Bauer-Kahan of Orinda, Jesse Gabriel of Encino, Adam Gray from Merced, Jacqui Irwin from Thousand Oaks, Evan Low from Campbell, Blanca Rubio from Baldwin Park, Sharon Quirk-Silva from Fullerton, and Carlos Villapudua from Stockton—and Independent Assemblyman Chad Mayes from Yucca Valley.

Several of the lawmakers are generally considered business-aligned moderates in the House Democratic caucus. They have scheduled a press conference for Thursday to provide more details.

Republican leaders were quick to throw their support behind the measure, though they still pledged to push to suspend the gas tax.

“This bill should be moved quickly to the governor’s office and targeted at California workers who are actually feeling the pain at the pumps,” Republican Assembly Leader James Gallagher of Yuba City said in a statement late Wednesday.

The proposal, lawmakers said in their letter to Newsom, should be considered as part of state budget negotiations that will begin in late spring. Early estimates of the size of California’s tax surplus have varied and will only become clearer after taxpayers file their returns next month. Even so, most estimates have been well above the projected $9 billion cost of the Democratic effort.

Although lawmakers are focused on benefits for all taxpayers, including those without legal immigration status, California’s tax structure is heavily skewed toward high-income earners. Data compiled by the state’s Franchise Tax Board show that nearly 1 in 4 tax returns filed in 2019 were from taxpayers with annual adjusted gross income over $100,000.

More than 1.4 million taxpayers, using 2019 data — earning more than $200,000 a year — would be eligible for $400 rebates under the plan at a cost of nearly $567 million. More recent tax data could increase the total amount of the rebate given to high earners.

The proposal, if adopted by Newsom and signed into law, would likely come closest to any current effort to deliver on the promise of the government spending limit approved by California voters. The 1979 Act requires a combination of taxpayer refunds and funding for new schools when revenues grow faster than most general government spending over a two-year period. Analysts have forecast that the state is likely to exceed the spending limit by next year. Last year, Democrats avoided sending blanket rebates by instead spending nearly $12 billion on a COVID-19 pandemic stimulus package open to Californians who earn $70,000 a year or less.

In 2017, the Democratic-controlled Legislature passed Bill 1 from the Senate, which was then the government. Jerry Brown signed the law into law, levying the state’s first gasoline tax increase in 23 years — 12 cents per gallon — to fix California’s roads and bridges. By law, the tax increases annually on July 1 based on growth in the California Consumer Price Index.

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