California Senate leaders say budget surplus has risen to $68 billion 2022-04-28 16:33:45

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Sacramento, California (AP) – California’s budget surplus has more than doubled since January to $68 billion, Democratic senators said Thursday, triggering a flurry of new spending proposals from lawmakers that include returning $8 billion to payers. Tax move highlights a row with Governor Gavin Newsom.

While the pandemic has prompted warnings of billions of dollars in budget deficits in most states, those concerns have not occurred as tax revenue increases across the country despite businesses shutting down due to the coronavirus that has caused millions to lose their jobs.

This hit of revenue was most pronounced in California, the most populous state in the country that includes Silicon Valley and many billionaires. Newsom warned that the state will face a deficit of $54 billion in 2020 after issuing the first statewide order for stay-at-home orders. Instead, revenues have risen sharply as the wealthy – who pay much higher taxes in California – have gotten richer throughout the pandemic.

Last year, California’s budget included a surplus of $47 billion, a record at the time. Thursday’s new estimate — based on preliminary numbers from the nonpartisan legislative analyst’s office — confirms that California is on track to beat that number this year.

The surplus of $68 billion in California’s general fund would be more than double the $29 billion figure that Newsom announced in January. In addition, California is expected to have a surplus of $37 billion that must be spent on education — up from the $16.1 billion Newsom announced in January. Newsom’s management will update the proposed budget by May 15.

Democrats – who hold the majority of seats in the state legislature – announced Thursday how they would spend the money. Their plan confirms most of what Newsom announced in January, with some new proposals.


One of the biggest pluses is having a plan to send out $200 checks to every taxpayer who earns less than $125,000 a year, or $250,000 annually for couples who file joint returns. The plan will also guarantee checks for $200 per dependent, meaning a family of five will get $1,000.

That proposal puts Democrats at odds with Newsom, who wants to send large checks of up to $800 to people who own cars in California to help offset higher gas prices. Newsom says his plan will cost about $9 billion.

Both Newsom and Democratic lawmakers said they want to get this money to taxpayers as soon as possible. But so far, they haven’t been able to agree on how to do it. In general, Democratic lawmakers say they don’t like Newsom’s plan because the money will only go to people who own cars. Newsom’s plan also includes $750 million to give people free rides on public transportation for three months.

“We are ready to act as soon as the governor joins us in supporting a plan that provides stronger relief to California families,” the two top leaders in the legislature, Senate Pro Temporary Speaker Tony Atkins and Assembly Speaker Anthony Rendon, said in a joint statement earlier this week.

The California gas tax increases slightly each year due to inflation. The tax is set to increase by about 3 cents per gallon on July 1. Newsom had proposed a bill that would halt the increase this year, which must be passed before Sunday to take effect. But Democratic leaders in the state legislature have never called for a vote.

Meanwhile, Republicans want to temporarily suspend the state’s gas tax, which at 51.1 cents a gallon is the second-highest tax in the country. On Thursday, a small group of Republican and Democratic lawmakers unveiled a plan that would suspend the gas tax entirely for a year, while ordering the savings to be transferred to drivers rather than oil companies. But legislative leaders have already said they won’t, a sign that the proposal likely won’t win support for its passage.

In addition to helping individuals, the Senate Democrats’ proposal would also provide billions of dollars in aid for small businesses. Businesses pay a tax that pays for unemployment benefits to people when they lose their jobs. But so many people have lost their jobs during the pandemic, that the fund has run out of money. California had to borrow money from the federal government, which the companies must repay.

Senate Democrats want to give rebates to companies with 250 or fewer employees, which would offset some of those taxes. In addition, Democrats want to provide about $500 million in grants to companies with 150 or fewer employees to help pay for a new law that requires them to give workers up to two weeks of paid sick leave due to the coronavirus.

The plan will not only spend money. It would also put more money into government savings accounts, raising the state’s reserves to a total of $43.1 billion – the largest number ever.

Atkins, the interim president of the Senate, said the plan “doubles our priorities” by “reinvesting California’s wealth in those who need it most, especially struggling families and small businesses.”

The plan would spend another $3 billion to fight homelessness, or $1 billion more than Newsom proposed in January. Senate Republicans have demanded a $10 billion “Mental Health Infrastructure Fund” to help pay for homeless care in the state, which includes many people with mental illness. But Republicans control only nine of the 40 seats in the Senate, which means they can’t pass their budget priorities themselves.

“We have neglected the mental health and substance abuse treatment needs of too many Californians for too long, mostly because we failed to invest in the facilities and workforce needed to provide needed assistance,” Republican Senator Patricia Bates said. week.

The Senate Democrats’ proposal is only one aspect of the budget negotiations. Any budget proposal must also be approved by the state assembly and the Democrat-controlled Newsom.

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This story has been updated to correct the day the proposed budget was released. It was released Thursday, not Wednesday.

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