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Newsom makes his offer on gas tax rebate

gas station roadside sign listing prices per gallon
Martin do Nascimento
The prices for fuel at a gas station in Oakland on March 7, 2022.

Gov. Gavin Newsom wants to send California drivers as much as $800 each and encourage public transit systems to offer free rides, the latest proposal from state policymakers seeking to offset the soaring cost of gasoline and other goods for struggling residents.

Newsom first floated the idea of a gas rebate earlier this month during his annual State of the State address, but details of his approach were slow to emerge, giving legislators time to surface several plans of their own. The governor’s Republican opponents have become increasingly critical of the lack of progress during the weeks since his announcement.

Under Newsom’s proposal, unveiled Wednesday, California would send registered vehicle owners $400 debit cards, limited to two rebates per person. Those would likely arrive starting in July, after the state adopted a budget for the upcoming fiscal year. The governor’s office estimates the rebate would cost about $9 billion.

“That direct relief will address the issue that we all are struggling to address and that is the issue of gas prices,” Newsom said in a video posted to Twitter.

The average price for a gallon has reached $5.88 in California, according to AAA, the highest in the country.

Following extensive criticism in progressive circles that a rebate based on car ownership would send the wrong message about the state’s climate goals and leave out many poor Californians, the governor is now also proposing $750 million in grants for local bus and rail agencies to offer up to three months of free transit, benefiting about 3 million daily riders.

The plan would also pause part of the sales tax on diesel and pause the scheduled inflationary increase to the state gas tax this summer, backfilling more than $1 billion in revenue for transportation projects. Legislative leaders have been cold on the proposal to pause the gas tax increase since it was included in Newsom’s budget in January.

Any relief is subject to negotiation with the Legislature and will likely arrive months from now through the state budget. Lawmakers must pass a balanced spending plan by June 15 or lose their paychecks.

A group of Democratic Assemblymembers put forward a more far-reaching proposal last week to send every California taxpayer a $400 check, a plan that supporters estimate would also cost about $9 billion.

Days later, Senate President Pro Tem Toni Atkins, a San Diego Democrat, and Assembly Speaker Anthony Rendon, a Lakewood Democrat, endorsed an idea to give $200 payments to each California taxpayer and their dependents. Unlike the governor’s proposal, their approximately $7 billion plan would cap eligibility to households making less than $250,000 per year, a nod to concerns from some liberals that relief should be more targeted to the neediest Californians.

“I appreciate Governor Newsom’s work on developing another option to bring relief to Californians experiencing the rising cost of fuel and consumer goods,” Atkins said in a statement. “The Senate is focused on ensuring that state money is targeted to those who actually need relief.”

Republicans, who unsuccessfully pushed last week for the Legislature to immediately suspend the state gas tax, have slammed Democrats for not acting more swiftly as gas prices continue to rise. Earlier this week they debuted a timer tracking “how long it’s been with no results since Governor Newsom promised relief in his State of the State address.”

“July? Seriously?” Assembly Republican Leader James Gallagher of Yuba City said in a statement. “Californians are struggling and Capitol Democrats are dragging their feet. How could it possibly take that long? Capitol Democrats are all talk and no action.”

Gallagher said Republican lawmakers would bring up their gas tax suspension bill for another vote this week.

Alexei covers Gov. Gavin Newsom, the Legislature and California government from Sacramento.