California's Newsom announces $76 billion budget surplus, rebate checks for Californians earning up to $75,000

California Gov. Gavin Newsom (D) announced Monday that California surprisingly amassed a $75.7 billion budget surplus last year, and he will propose using some of that windfall for direct payments to state residents earning up to $75,000 a year. Last year, California officials warned about facing a budget deficit of up to $50 billion, but a combination of federal pandemic aid and capital gains taxes from wealthy California stock market investors filled state coffers.

Newsom's proposal requires approval from the state Legislature, but the chairs of the budget committees in the Democratic-controlled state Senate and Assembly joined Newsom for his announcement, suggesting the Legislature is on board. The governor's plan would send $600 to anybody earning up to $75,000 who did not get a check in an earlier round of state stimulus payments aimed at people earning up to $30,000 a year. Newsom also proposed an additional $500 for $75,000-and-under households with children and $500 for undocumented immigrants.

H.D. Palmer, a spokesman for California's Department of Finance, said the state is required to give some money back to taxpayers under a 1979 constitutional amendment, California is $16 billion above the threshold, and Newsom could delay the payments but has decided to do the rebates now to hasten the post-pandemic recovery. Half that surplus, or $8.1 billion, will go toward the rebates, while the other half, per law, will go to public schools.

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A handful of Republicans trying to unseat Newsom in a likely recall election accused him of trying to curry favor with voters. Newsom's GOP critics generally favored the rebate policy, though.

The tax rebates are part of $100 billion in stimulus spending Newsom is proposing this week. He also wants to spend $5.2 billion to help with unpaid rent from the past year — a proposal supported by landlords — and $2 billion for past-due utility bills. Separately, the U.S. Treasury Department said Monday that California will receive $27 billion from the federal coronavirus spending package.