Agreement reached on plan for more than $9 billion in gas recovery for California drivers

A gallon of regular gasoline costs $6.99 at a Shell station off the Pacific Highway.

A gallon of regular gasoline was $6.99 at a Shell station on Pacific Highway on June 8. (Natalie Rocha)

Gavin Newsom and state lawmakers have reached a tentative agreement to send $9.5 billion in tax refunds to Californians, providing up to $1,050 for families that drop in long-awaited financial relief from record-high gasoline prices and other increased costs.

The plan will provide larger refunds to families who earn less money and include an additional payment for dependents, according to the documents outlining the offer.

Although Newsom originally hoped to get the money back in people’s pockets this summer, a feud among Democrats in the state Capitol has delayed the schedule by several months. Refunds to offset the highest fuel costs of any state in the country likely won’t begin until October if approved by the legislature next week.

The plan to issue the refunds is part of a larger state budget agreement that the governor and lawmakers are expected to announce soon. Next year’s spending plan includes more funding for K-12 education, COVID-19 bonuses for health care workers, money for drought and wildfires, expanded access to abortion services, and other funding priorities for California Democratic leaders.

Enduring high gas prices has been at the center of a debate between Newsom and lawmakers over how to spend the state’s surplus tax revenue, which was expected to reach $97 billion next summer. The two sides differed for months over who should get the refunds and how much they should get.

Newsom eventually abandoned his efforts to tie refunds to vehicle ownership through the Motor Vehicle Administration and approved a legislative plan to work with the Franchise Tax Board to send direct deposits and debit cards to taxpayers. Senate and Assembly leaders waived their call to exclude wealthy Californians from being eligible for refunds and settled on an income limit of $250,000 for individual taxpayers and $500,000 for subscribers — more than double the limit in their original proposal.

The plan will provide refunds on a graduated scale based on three income levels.

An individual who earns up to $75,000 per year will receive a $350 refund, which will double to $700 for subscribers who earn up to $150,000. Families will receive an additional $350 if they claim any dependents, for a maximum refund of $1,050.

At the next income level, single applicants who earn up to $125,000 will receive a $250 refund. Families who file jointly and earn up to $250,000 will receive $500. Children or other dependents will qualify the taxpayer to pay an additional $250, making families in the income bracket eligible for the $750 total.

Individuals earning up to $250,000 will receive $200, and joint file holders earning up to $500,000 will receive $400. Families with dependents will receive an additional $200, making this income bracket eligible for a maximum of $600.

The legislature will vote on the refunds and the state’s final budget plan in a series of bills next week.

Last week, lawmakers sent Newsom an initial state budget plan totaling more than $300 billion, a framework that included their initial proposal to provide $8 billion in tax refunds.

Lawmakers passed the initial budget in order to meet the constitutional deadline of June 15 to avoid having their salaries forfeited. But they have not reached an agreement with the governor on the discounts or spending plan and expect to change many details this week.

Under the new agreement, the refunds will increase by $1.5 billion over the legislature’s initial plan.

The governor outlined a $11 billion proposal in March to give rebates to drivers. Lawmakers have presented various ideas that cost less than the Newsom plan, with many lawmakers wanting to direct more government funding for infrastructure projects and improvements in their areas.

Efforts to ease gasoline prices are also falling in the middle of an election year and at a time when inflation and interest rates are rising, heightening fears about a recession.

Californians have paid an average of $6.34 for a gallon of regular unleaded gasoline as of Friday, according to the American Automobile Assn. The state average is down slightly from a record high last week but still $1.42 above the national average.

The deal on refunds comes after President Biden asked Congress to approve a gas tax exemption through September, halting the federal gas tax in an effort to lower gas prices by 18 cents a gallon nationwide. Biden also called on states to similarly suspend fuel taxes to further reduce prices.

California Republican lawmakers have repeatedly criticized Democrats for failing to take swift action to lower the cost of gasoline and rejecting GOP calls to suspend the state’s 51 cents per gallon tax on fuel.

Association President Anthony Rendon (D-Lakewood) announced a legislative investigation Monday to determine whether oil companies “rip” drivers. The Democratic leader said he would appoint a select committee to determine what steps the state could take to lower gas prices, looking beyond just the cuts.

The select committee’s investigation followed an earlier investigation that Newsom asked the California Energy Commission to conduct in 2019 that found the companies’ large gas stations were charging “higher prices for what appeared to be the same product” and raised the possibility that rival oil companies were illegally fixing prices. . .

This story originally appeared in the Los Angeles Times.

Leave a Comment