SACRAMENTO, Calif. (AP) — Californians who bear the nation’s highest gas prices could soon get a tax break, free rides on public transit and up to $800 on debit cards to help pay for fuel under a proposal revealed by Democratic Gov. Gavin Newsom on Wednesday
Gas prices have soared in recent weeks, the result of pandemic-induced inflation and Russia’s invasion of Ukraine. State governments across the country have debated what to do about it, with the most popular choices being to cut fuel taxes or offer ratepayer rebates. Last week, the governors of Maryland and Georgia signed laws temporarily suspending their state’s gasoline taxes, while Georgia also on Wednesday offered $1.1 billion in refunds to taxpayers as part of a separate action.
Average gasoline prices in California on Wednesday hit a new state record high of $5.88 a gallon, more than $2 higher than a year ago, according to AAA. California has the second highest gasoline tax in the nation at 51 cents per gallon. But Democratic state leaders are reluctant to waive the gas tax because they fear oil companies won’t pass the savings on to drivers.
Instead, they want to send money directly to taxpayers.
The governor’s office says the average California driver spends about $300 a year on gas taxes. Newsom’s idea is to give car owners $400 debit cards for up to two vehicles, for a total of $800. The money would go to anyone with a state-registered car – including the wealthiest, people living in the country illegally and even drivers who own vehicles that don’t use gasoline.
For people who don’t have a car, Newsom wants the state to pay for their bus or train fare for three months. His proposal would give $750 million to transit and rail agencies, which Newsom says would be enough to provide free rides to 3 million people a day. About $1.1 billion would pay to suspend planned inflationary diesel and fuel tax increases this summer, and another $500 million would pay for projects that promote cycling and walking.
“This package is also focused on protecting people from gas price volatility and promoting clean transport,” Newsom said.
Newsom’s plan must be approved by the Legislative Assembly, where Democrats dominate both the Assembly and the Senate. Democratic leaders, however, don’t like the idea of giving money to the rich. They discussed their own refund proposal, which would provide refunds of $200 to each taxpayer and their children with taxable income below $125,000 for single filers and $250,000 for joint filers. This means that a family of five would receive $1,000 while a single parent with two children would receive $600.
“The Senate is focused on ensuring that state money goes to those who really need help and we look forward to working with Governor Newsom, Speaker Rendon and our legislative colleagues to quickly develop a proposal. that meets the needs of struggling Californians,” the state Senate said. Pro Tempore Chairman Toni Atkins, a Democrat from San Diego.
A spokesman for Democratic House Speaker Anthony Rendon called Newsom’s idea “consistent with the president’s goal of providing targeted financial assistance to Californians who need it most,” but stressed that the idea was “in the very early stages”.
Newsom’s plan is similar to a separate proposal introduced last week by more moderate Democrats in the state Assembly that would give every taxpayer $400, regardless of income. Congresswoman Cottie Petrie-Norris, a Laguna Beach Democrat who supports the plan, on Wednesday urged the Legislature and Newsom to act quickly.
“The outlines of the governor’s proposal are a little different from what we proposed, but I would be very happy to support that,” she said.
The governor’s office said Newsom would be willing to negotiate with lawmakers over who can get the money, a process that could take some time to sort out.
Republicans favor a temporary suspension of the state’s gas tax, saying it’s the fastest way to deliver relief. Discounts like the ones Newsom is offering take time to deliver, with the governor’s office saying people could see the money by July.
“People need relief now,” said Republican Assembly Leader James Gallagher. “We now have, like, four different competing plans among Democrats. These guys are going to be trading against themselves for weeks or months and who knows what we’re going to get.