California Governor Gavin Newsom plans a $100 billion economy recovery package, with the centerpiece a proposal to give $11.9 billion of direct cash payments to Californians.
The plan would expand on a previous program distributing $600 checks to qualifying low-income residents by extending eligibility to the middle class. Two out of three Californians would receive a check of at least $600, and families with kids will get an additional $500, according to a release from the Democrat’s press office. It would create the biggest state tax rebate on record, the release said.
Newsom, who’s facing a likely recall election later this year, will spend the week highlighting parts of his package, which is billed the “California Comeback Plan.” He’s required to present a revised budget for the next fiscal year by Friday.
The announcement underscores the improved financial picture of the most-populous U.S. state, which last May girded for deficits because of the pandemic-spurred recession. But the state, with a progressive tax system that rakes in more revenue when the income of the highest earners rises, has collected more than it expected from its wealthiest residents. That group has reaped the benefits of rising stock prices and stable employment even as lower-income workers lost their jobs in the pandemic.
In January, the state was expecting a $15 billion surplus, and that was before the federal stimulus package passed that gives it $26 billion. Tax collections for the first nine months of the fiscal year are running about 14% ahead of projections.
“The state is awash in cash,” John Ceffalio, senior municipal research analyst at CreditSights Inc, said before the announcement. “California came into the pandemic in good fiscal shape and it’s probably leaving it in even better fiscal shape.
This article was provided by Bloomberg News.