Good News for California Drivers

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

California Governor Gavin Newsom and state lawmakers have agreed 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 initially 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 won't begin until October if the legislature approves next week.

The plan to issue the refunds is part of a more significant 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 have been at the center of a debate between Newsom and lawmakers over how to spend the state's 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. They 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 based on three income levels on a graduated scale.

The person 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, individual delegates who earn up to $125,000 will receive a $250 refund. Couples who file taxes together 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 with income 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.

Lawmakers passed the initial budget to meet the constitutional deadline of June 15 to avoid having their salaries forfeited. But they have not agreed 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.

In March, the governor outlined an $11 billion proposal to provide drivers rebates. 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.

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