On Monday, Gov. Gavin Newsom announced that the state is projected to have a $38 billion discretionary surplus in 2021 and that he wants to expand the state’s stimulus program by giving two-thirds of California residents an additional stimulus check.
According to Forbes, California has the highest estimated debt of any state, with nearly $363 billion in liabilities in 2019,
In January, Newsom announced that the state expected a $15 billion surplus, due to increased revenues in 2020.
Governor Newsom announced a $600 “Golden State Stimulus” for roughly four million low-income Californians. However, the continued recovery of the nation’s economy has driven the stock market to new highs, even as job recovery has been slower than expected.
The San Francisco Chroncile reports:
Newsom said California has a historic $75.7 billion surplus, tens of billions of dollars larger his original $227.2 billion spending plan. The state is sitting on another $26.6 billion from the latest federal coronavirus relief package in March, with broad authority on how to use it.
$38 billion of the surplus is available for discretionary spending, Newsom has therefore proposed a $100 billion “California Comeback Plan,” which includes “a tripling of the state’s direct stimulus effort to include a total of nearly $12 billion in direct cash payments to Californians.”
Promoting his proposal as “the biggest state tax rebate in American history,” Newsom’s plan says: “Two-thirds of Californians will benefit from a stimulus check of at least $600, and families with kids will now benefit from an additional $500.”
Under state law, a portion of the surplus might have been sent back to taxpayers anyway under the “Gann limit,” which limits per capita state spending to 1978-79 levels. However, the Gann limit targets taxpayers specifically; the stimulus would target taxpayers, families with dependents, and undocumented residents, who will receive $500 additional stimulus.
The Chronicle suggested that there could be both a stimulus check and a Gann limit rebate to taxpayers this year.
Newsom’s office also promised in a statement that “the state would also offer the largest renter assistance package of any state in America, with billions of dollars to help low-income Californians pay back 100 percent of their back-rent, their rent for the months to come and overdue water and utility bills.”
Last year, California expected to face a $54 billion deficit, due to the economic side effects of the coronavirus at the time.
Newsom will likely face a recall election later this year, after critics gathered more than 1.5 million signatures. Several Republicans have already entered the recall race.