Californians to get up to $1,050 in inflation relief through Newsom’s budget deal

Californians will receive up to $1,050 in inflation relief funds as part of a $300 billion budget agreement state leaders reached after weeks of negotiations.

Gov. Gavin Newsom, Senate President Pro Tem Toni Atkins, D-San Diego, and Assembly Speaker Anthony Rendon, D-Lakewood, announced their budget deal on Sunday night.

News of a tentative agreement on an inflation and gas price relief package — a major sticking point in talks between Newsom and legislative leadership — leaked late Friday, paving the way for the rest of the spending plan.

That $17 billion inflation package will send $9.5 billion directly to 17.5 million taxpayers through a three-tiered plan, with more funds going to lower-income Californians.

California will also spend billions on housing, health care, transportation and abortion and reproductive care access. Leaders project the state will maintain more than $37 billion in total reserves.

Newsom, Atkins and Rendon called the inflation relief plan a “centerpiece” of the budget agreement in a Sunday night news release.

“California’s budget addresses the state’s most pressing needs, and prioritizes getting dollars back into the pockets of millions of Californians who are grappling with global inflation and rising prices of everything from gas to groceries,” the leaders said the release. “The centerpiece of the agreement, a $17 billion inflation relief package, will offer tax refunds to millions of working Californians.”

Inflation relief package

The inflation relief package legislative leaders and Newsom negotiated includes aspects of two dueling plans they introduced during the spring.

Atkins and Rendon had initially pushed for an income-limited plan to send $200 to taxpayers earning $125,000 or less, or $250,000 for joint filers. Families would have gotten an additional $200 for each dependent. The legislators also wanted to distribute funds using the Franchise Tax Board, the same agency that sent out Golden State Stimulus checks last year.

Newsom, on the other hand, wanted a relief program that sent $400 checks to all vehicle owners, to cap out at $800 for up to two cars. He preferred to send money using debit cards issued by the Department of Motor Vehicles and a third-party vendor.

The agreed-upon plan is target to taxpayers, not vehicle owners, like legislative leaders wanted. But it includes money for higher-income earners, providing the middle class inflation relief Newsom wanted.

Families will receive relief checks of $200 to $1,050, depending on their income level and family size. The three income tiers for individual filers range from $75,000 and under to $250,000.

The package still provides additional money for families, but it’s capped at one dependent. For example, a family of four would be eligible for three payments — two checks for the tax-paying adults and one check for the two children.

Supplemental Security Income and State Supplementary Payment recipients will also see grant increases starting in January 2023. In addition, the state will spend $1.4 billion to help utility customers pay past-due bills accrued during the COVID-19 pandemic.

Although the budget does not include plans to suspend the overall gas excise tax, lawmakers plan to put the diesel sales tax on hold and backfill the lost revenue with $439 million.

This will save drivers using diesel fuel about 23 cents per gallon, “which primarily benefits businesses,” according to the budget plan.

California health care, abortion

The budget agreement also includes large sums for transportation, Medi-Cal expansion, housing and abortion care access.

The state will spend $14.8 billion on a multiyear transportation package to fund “transit, freight, active transportation, climate adaptation, and other purposes across the state.”

Leaders also plan to expand the state’s Medi-Cal program “to all eligible Californians regardless of immigration status” by January 2024. Previously, income-eligible undocumented residents could access the program only if they were 25 or younger or 50 or older.

This budget will open up Medi-Cal access for undocumented residents between the ages of 26 and 49 who were previously left out of the program, making California the first state to offer health care coverage to all undocumented residents.

State leaders will spend $2 billion on an affordable housing package that includes money for multifamily, farmworker and veterans housing, as well as homelessness prevention.

California will also provide $700 million in grants over two years “to help local governments with resolving critical encampments and transitioning individuals into permanent housing.”

In addition, the state will invest more than $200 million in “reproductive rights investments” to help expand abortion access. This includes subsidies to help uninsured pregnant people and those enrolled in Covered California plans pay for abortion care.

“In the face of growing economic uncertainty, this budget invests in California’s values while further filling the state’s budget reserves and building in triggers for future state spending to ensure budget stability for years to come,” Newsom, Rendon and Atkins said.