By Jill Cowan for the New York Times:
On Monday, Gov. Gavin Newsom offered his answer to a question that has been percolating since reports started to show that the state’s pandemic-battered coffers weren’t so empty after all: How should California use its unexpected budget surplus?
“The largest year-over-year tax rebate of any state in American history,” the governor said, speaking in Oakland, flanked by local leaders and state lawmakers. “Direct stimulus checks going into people’s pockets.”
Those would be $600 checks to roughly two-thirds of California taxpayers, as Shawn Hubler, Conor Dougherty and I reported.
They’re one part of the governor’s plan for a budget windfall that was not only unanticipated, but also large. As in $75.7 billion.
The governor also announced plans to pay 100 percent of the back rent owed by some low-income renters who have been affected by the pandemic, and to spend $2 billion to help residents pay overdue utility bills.
Over the course of the week, Newsom is set to unveil other big swings in his annual budget revision, including asking the Legislature to approve $12 billion in new spending on homelessness over two years — which would be by far the most ever committed to the problem — and billions on expanded child care subsidies and drought and wildfire mitigation.
We’ll explore those plans more in depth soon. But for now, here’s what to know about the proposals announced on Monday:
Who will be eligible for the additional Golden State Stimulus checks?
The rebate plan would send state stimulus checks of at least $600 to about 11 million middle-class taxpayers with adjusted gross incomes of less than $75,000, with an extra $500 to those with dependent children; the income threshold and benefit would be halved for married couples filing their tax returns separately.
The proposal would cover eligible taxpayers, regardless of immigration status, who did not get a $600 state stimulus check under an earlier program that targeted more than four million low-income Californians.
If I’m eligible for a check, when will I get it?
The money would be a tax rebate, so just make sure you file your taxes.
Why does the state have so much money right now?
California relies heavily on income tax, as opposed to property or sales tax. The vast majority of the state’s income tax revenue comes from California’s wealthiest residents. (Almost half of the personal income tax the state collects comes from the top 1 percent of the state’s earners.)
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Wealthy Californians, by and large, haven’t stopped making money during the pandemic. They have benefited from a soaring stock market and an I.P.O. boom. And they have mostly been able to work from home, while lower-income Californians have picked food, stocked grocery store shelves and delivered packages shipped by more Californians laboring in enormous warehouses.
Will this actually make a dent in the state’s pandemic recovery?
Chris Hoene, executive director of the California Budget and Policy Center, a Sacramento think tank that promotes policies meant to help low- and middle-income households, said that the aid proposed by the governor — in combination with federal stimulus payments, rental assistance and unemployment insurance — will make a significant difference not just for individual Californians but also for the state’s economy as a whole.
While the surplus, he said, was built up because the state’s wealthy residents made money during the pandemic, “the rest of California isn’t doing as badly as had been previously thought because of the federal and state aid that’s been provided.”
Hoene said that as the state’s eviction moratorium ended, helping tenants pay back rent would prevent many Californians from losing their homes, avoiding a crisis that would further destabilize families already living precariously and compound the state’s homelessness crisis.
But as has often been the case throughout the pandemic, the state will have to work with local governments and community organizations to actually get rent relief to people who need it most.
What does this mean for Newsom politically?
Raphael Sonenshein, the executive director of the Pat Brown Institute for Public Affairs at California State University, Los Angeles, told me that Newsom was benefiting from a major nationwide shift in the Democratic Party: a new embrace of spending big money on things people want money to be spent on.
“Spending is pretty popular,” he said.
For decades, Sonenshein said, the Democratic Party has made frugality a kind of selling point. But President Biden’s ambitious, New Deal-inspired plans to help the nation recover from the pandemic have effectively made a case for Newsom’s sweeping proposals at the state level.
“The stimulus payments are more popular than the Biden administration,” Sonenshein said. That revelation is likely to cut both ways for Newsom as he faces a recall effort.
While the fact that the state is flush with cash to spend certainly helps the governor, the question remains whether receiving an extra $600 will persuade proponents of recalling the governor to change their minds.
“I think it’s awfully hard to convince people of anything these days,” Sonenshein said. “The real audience is more likely to be Democrats and Independents who now have a stronger reason to stay with the governor and the governor’s party.”