California legislative leaders craft plan to provide refunds for cost of gas, goods

SACRAMENTO —  After pushing back on Gov. Gavin Newsom’s proposal to offer tax rebates to exclusively offset rising gas prices, leaders of the state Senate and Assembly are crafting their own plan to provide broader-based refunds to address the increasing cost of all goods through $200 payments for each California taxpayer and dependent.

Assembly Speaker Anthony Rendon (D-Lakewood) and Senate President Pro Tem Toni Atkins (D-San Diego) would limit eligibility to households with income of up to $250,000, differing from other proposals that would give rebates to even the wealthiest Californians, according to an outline of the “Better for Families Refund” obtained by The Times.

“Speaker Rendon and I made a commitment to the people of California that we would find a solution to help people get through the financial hardships imposed by the rising cost of fuel and consumer goods,” Atkins said. “We’re holding true to that promise, and have developed a proposal that would help a vast majority of Californians.”

The proposal could cost the state an estimated $6.8 billion, though that figure could change. It’s designed to put more money in the pockets of larger families with no limits on the number of dependents a taxpayer can claim.

The plan from legislative leadership is the latest in a series of ideas emerging from the state Capitol to help Californians with the high cost of gasoline and other expenses.

Katie Talbot, a spokesperson for Rendon, described the plan as in the “very early stages” and said it’s “consistent with the Speaker’s goal of providing targeted financial relief to Californians most in need.”

It comes in the middle of an election year and at a time when inflation and interest rates are on the rise, elevating fears about the economic future and financial pressures on people in California and nationwide. Record state revenues and a voter-approved constitutional spending cap are also fueling the flurry of ideas to send money back to state residents.

A separate group of Democrats this week proposed a $400 rebate to every taxpayer. Comparing all the plans, advisors to Rendon and Atkins estimated that these rebates could result in $9.2 billion in lost revenue to the state. Some have questioned whether California’s highest earners deserve the same relief as those struggling to make ends meet.

Republicans made an earlier call to suspend the 51-cent-per-gallon gas tax for six months at a cost of about $4 billion in transportation revenues. That plan could save each driver $135, though Atkins and others have pointed out that there’s no guarantee that oil companies would pass those savings on to consumers. However, the nonpartisan Legislative Analyst’s Office said in a February report that “most of the change in the tax rate likely would be passed through to prices at the pump.”

Assembly Republican leader James Gallagher of Yuba City said he supports sending rebated tax dollars to Californians and suspending the gas tax. Gallagher wants proposals to be put up for a vote next week, saying he hopes the much-needed tax relief doesn’t get bogged down in a debate among Democrats.

“While the Democrats continue to negotiate amongst themselves, Californians continue to suffer from these high costs,” Gallagher said. “We as Republicans have our own plan that will provide immediate relief — suspending the gas tax right now.”

In January, Newsom proposed pausing the annual gas tax increase for a year, which legislative estimates suggest could cost $500 million in transportation revenues, or amount to about $15 in savings per driver.

Newsom seemed to want to go further in his State of the State speech this month with a vague promise to put more money back in the pockets of Californians, which his office described as a tax rebate to offset gas prices. Newsom gave no details and his team quickly walked back an advisor’s comments that the rebates would likely go to vehicle owners.

Newsom’s office promised more details on his plan next week and said it would include “funding to public transit so they can provide direct relief for riders.”

Rendon and Atkins immediately committed to bringing substantial tax relief to Californians following Newsom’s speech, but they shot down the idea that financial relief should reduce funds for road repairs or exclusively offset the cost of gas.

Though Rendon generally agreed with many of the principles of the plan unveiled this week to offer $400 to taxpayers, he also said he wouldn’t support anything that provides refunds to the ultra-rich.

Conversely, budget advisors to Atkins and Rendon estimate that their plan would send refunds to 90% of taxpayers through the Franchise Tax Board and include a grant program to provide refunds to low-income Californians who do not file taxes.

“Unlike other proposals, this would hold harmless critical Proposition 98 funding for schools and resources for road and highway infrastructure and maintenance,” Atkins said Friday. “Right now, families throughout our state are struggling to stretch their household budgets due the rising cost of fuel and goods — we’re working on a solution that could be the responsible path forward.”

Times staff writers Mackenzie Mays and Phil Willon contributed to this report.