Newsom Unveils State's COVID Recovery Plan; $75B Budget Surplus To Provide For Direct Payments
OAKLAND (CBS SF) -- As the clock ticks down to California's reopening from all COVID-19 restrictions on June 15 and with state coffers flush with a $75.7 billion budget surplus, Gov. Gavin Newsom unveiled a $100 billion recovery plan which will include individual tax rebates of up to $1,100.
Chief among the new proposals Newsom announced Monday was a major expansion of the Golden State Stimulus, providing additional direct payments to middle-class families that make up to $75,000.
Under the plan, two-thirds of state residents - individuals and households making between $30,000 and $75,000 annually - will benefit from $600 direct payments. Households with dependents making up to $75,000, including undocumented families, will also now be eligible for an additional $500. The plan triples California's previous investment, reaching more people and giving bigger benefits.
The state's economy has been ravaged by months of business shutdowns and closures; a stroll through most downtown neighborhoods in the state gives a stark reminder of how economically devastating the pandemic has been. Stores, restaurants, bars and small businesses have closed for good. Displaced workers have either relied on government aid or taken jobs in other segments of the economy. Many have left California.
With new COVID-19 cases and hospitalizations plunging and vaccination rates soaring, Newsom has set a target date of June 15 to lift all business restrictions put into place during the pandemic.
"I'm about to make an announcement that no other governor in California history has ever made and I would argue that no other governor in American history has ever made," said Newsom, who is facing a fall recall election triggered by criticism over his handling of the pandemic. "Today we are announcing a $75.7 billion budget surplus...This time last year we announced a $54.3 billion projected shortfall. Today we are announcing a projected $75.7 billion budget surplus. It's a remarkable turnaround."
Newsom's announcement comes days before a Friday deadline to present a balanced revised budget for the next fiscal year to the state legislature.
"California's recovery is well underway, but we can't be satisfied with simply going back to the way things were," Newsom said. "We are tripling the Golden State Stimulus to get money in the hands of more middle-class Californians who have been hit hard by this pandemic. Two in three Californians will receive a check from the state and more than $5 billion in aid will be made available to those who need help paying their rent or utility bills."
Unlike other states across the county left cash-strapped in the wake of the pandemic, Newsom finds himself with a sizeable surplus -- a product of among other things a progressive tax system that brings in more revenue when the income of the state's highest earners rises as it has during the pandemic.
"The state is awash in cash," John Ceffalio, senior municipal research analyst at CreditSights Inc., told Bloomberg News before the announcement. "California came into the pandemic in good fiscal shape and it's probably leaving it in even better fiscal shape."
Newsom also credited the state's efforts to combat the COVID pandemic.
"California's economic success, our economic recovery is predicated on ending this pandemic." the governor said "And we need to be mindful that this disease didn't take Mother's Day off, it's not taking the summer off. It's as deadly as it's ever been, and we are mindful that the mutations are as challenging as they've ever been."
"If want to get our kids safely back into in-person instruction, get our small businesses back up and operational, if we want this economic recovery to continue as robustly as it's began, we need to continue our vaccine program, we need to continue to be vigilant and mindful of mask-wearing and social distancing until this disease is behind us once and for all," he added.
Under Newsom's California Comeback Plan, 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.
Newsom called his plan a proposal. It will need to be passed by California's State Senate and Assembly.
"I want to make one thing clear and I make it with the respect that is due," Newsom said as he stood in Oakland's Fruitvale District. "This is a proposal from the [Newsom] administration, it requires concurrence and support of the legislature and that's why it's humbling and very meaningful to have the two budget chairs [Assemblyman Phil Ting and State Senator Nancy Skinner] here today."
"I am by no means naïve about the deliberative process as we roll out, not only today's announcement but we this May [budget] revise on Friday."
Republican National Committee member from California Harmeet Dhillon says that money should be used elsewhere.
"You can't fix the affordability crisis in this state with a $600 check," Dhillon told KPIX 5. She called the move a recall election ploy,
"I think these one-time checks to a segment of the population here are really a function of his impending recall election and his desire to try and buy votes," explained Dhillon.
She also likened the checks to a band-aid, not structural reform of the California tax code.
"A tax refund would be a tax refund. This is not a tax refund. This is checks to a certain segment of the population, this is one time relief for people," she said. "A tax refund is acknowledging that all of the tax payers in the state are grossly overcharged. The segment of the population that pays the highest taxes in this state is not getting a tax refund."