Over the past few months Californians have been paid.
Checks ranging from $ 600 to $ 1,100 have landed in the mailboxes and bank accounts of about two-thirds of the state’s residents, under a program known as the Golden State Stimulus.
You may have thought, as I did initially, that these payments were just another form of relief from Covid-19. But because of obscure California law, the state was required to send that money to us – with or without the pandemic.
In 2022, the same law is expected to come into force again. This means that, in all likelihood, more money will be coming to us soon.
How we got here
To begin with, a brief history: Californians revolted against taxes in the late 1970s.
Voters passed Proposition 13, a landmark measure that limited property tax increases, in 1978. The following year, Paul Gann, one of the proposal’s co-sponsors, suggested another tax break.
Gann proposed to cap state spending: If California’s spending approached a certain threshold (calculated by adjusting 1979 levels for population growth and inflation), the state would have to reimburse taxpayers. in the form of a refund.
In 1979, voters overwhelmingly approved the measure, known as the “Gann Limit,” and then amended the law to allow a portion of the excess income to also go to funding education.
Why California has so much money
This brings us to today. Millions of Californians have lost their jobs during the pandemic – the state’s unemployment rate is the highest in the country – and a third of households here aren’t earning enough to cover the true cost of living in this expensive state.
But our state government has amassed the money. California has a record fiscal surplus of $ 76 billion for the current fiscal year and is forecasting $ 31 billion in excess revenue for the fiscal year that begins in July.
Across the country, low-income adults have been hit particularly hard by the Covid-19 economic crisis, while wealthier Americans have remained largely unscathed. This trend continues in California, where we also tax our rich at very high rates.
“What makes it unique in California is that we have this disproportionate wealth and income inequality,” said Chris Hoene, executive director of the California Budget and Policy Center. “And then we have a tax structure designed to generate income from that.”
At the end of 2020, Gov. Gavin Newsom predicted the fiscal year to begin in July 2021. Projections showed the state could exceed the Gann limit by billions of dollars.
Under state law, the governor was not required to act on the limit for two years. But Newsom faced the prospect of a fall recall election.
So in January, Newsom announced the Golden State Stimulus, what he called the largest state tax refund in U.S. history. A few months later, the state began distributing about $ 12 billion to Californians who earn $ 75,000 or less per year.
Now, the state’s office of the legislative analyst predicts that California will have a surplus of $ 31 billion for the fiscal year that begins July 1, 2022. The exact way Newsom will avoid crossing the Gann limit this This will not become clear until he publishes his budget proposal. in January.
While the Golden State Stimulus has helped Californians hardest hit by the pandemic, some have said it unfairly excludes the very people who contribute the most to the state’s revenue. But Newsom recently hinted that he plans to take inspiration from this year’s plan.
“I am very proud of the historic tax refund,” Newsom said at a press conference last month. “And I look forward to making the decision which I believe is in the best interests of 40 million Californians.”
The latest news on Omicron and the pandemic
What we eat
Chocolate bars with pecans.
Where we travel
Today’s travel tip comes from Bob Bruno, a reader who lives in Discovery Bay:
“California National Highway 160, the southern branch, runs from the Antioch Bridge along the Sacramento River to Sacramento. It is a beautiful road, especially in the spring.
There are a few interests along the route: The Ryde Hotel offers Sunday brunch, the town of Locke built by Chinese immigrants in 1918 and containing a beautiful garden and game room museum, pear orchards , beautiful homes and of course the Sacramento River.
I drive it often and love it.
Tell us about your favorite places to visit in California. Email your suggestions to [email protected] We will share more in future editions of the newsletter.
What we recommend
11 new books this week.
And before leaving, some good news
The “Happy Days” are back.
Actor Henry Winkler is auctioning off costumes, accessories and other memorabilia from his career, including the leather jacket and motorcycle of his beloved character Fonzie.
Fonz’s complete outfit – the jacket, Levi’s jeans, white t-shirt and black boots – is expected to sell for between $ 50,000 and $ 80,000 at the Bonhams auction house in Los Angeles on Wednesday, KABC reports.