California lawmakers reach deal on record state budget

SACRAMENTO, Calif. (CN) — Governor Gavin Newsom and California legislators have reached a deal on the 2022-2023 state budget, including $17 billion in "inflation relief" for residents and a suspension of the state sales tax on diesel.

The historic budget will spend nearly $276 billion over the next fiscal year on a number of programs, infrastructure investments and nearly $37.5 billion in reserves heading into the 2023-24 fiscal year, even as the threat of a recession looms.

One of the major achievements of the proposed budget deal reached by the Legislature and Newsom involves relief for inflation and at the pump.

Newsom wanted to send $400 to vehicle owners while the Legislature wanted to send money to families based on their income level; with families earning less receiving more.

Under the proposed budget deal the Legislature largely got its way with a three-tiered income-based system. Around 97% of taxpayers will receive relief — individuals earning up to $75,000 and couples making $150,000 would receive at least $350 each and an additional $350 if they have at least one dependent. Those earning more would receive less.

The money would begin to go to taxpayers beginning Oct. 1 and would be either distributed via direct deposit or as debit cards. Assemblyman Phil Ting, chair of the Assembly Budget Committee, said the goal of the payments would be to help those who are suffering from higher prices but not necessarily at the pump.

"The goal is not to penalize those who ride buses, provide them relief. The goal is to put more money into the hands of Californians rather than the oil companies," said Ting. "When crafting this agreement we learned from other states which implemented a gas tax holiday, and generally the price of gas only goes down for one month."

The San Francisco Democrat added the 2022-23 budget is one built on the strength of California's economy and strength of its pandemic recovery.

"This budget will make important and necessary investments to help middle and working class Californians," said Ting. "I am proud of the work that the staff, the leaders of the sub-committees, and everyone else what they have done to get the budget done."

Assemblyman Vince Fong, vice chair of the Assembly Budget Committee, said the budget of this size and magnitude requires thorough review and discussion before it is voted on and expressed his disappointment that there was not much time to review the proposed budget deal before the committee hearing. The Republican from Bakersfield said that passing a budget by press release is not the way to govern.

Assemblyman Steven Choi, a Republican from Irvine, decried the deal to suspend the diesel tax rather than a tax holiday for all drivers.

“The updated budget deal between the governor, Assembly speaker, and Senate president pro Tem does not go far enough to provide hardworking Californians direct, immediate relief from inflation and high gas prices. Rather than suspending the gas tax for all California drivers, this budget deal suspends the diesel tax and meanwhile allows the gas tax to actually increase July 1. This is offensive to struggling families who were promised gas price relief over 100 days ago," Choi said in a statement.

But Democrats said the deal will bring relief to families and is a good one for the state.

“With this budget, we are spreading our state’s wealth to hard-working Californians and small businesses like never before,” Senate President Pro Tem Toni Atkins in a statement. “We are focused on providing struggling families the relief they need to weather rising costs of fuel and groceries, investing ongoing funding in core programs and services, funding one-time infrastructure projects that will keep California moving for years to come, and continuing to reinforce California’s ability to meet unforeseeable challenges.”

Newsom touted what the spending package will do to combat climate change and the Golden State's ongoing and historic drought.

"California is doubling down in our response to the climate crisis — securing additional power-generating capacity for the summer, accelerating our clean energy future, expanding our ability to prepare for and respond to severe wildfires, extreme heat, and the continuing drought conditions that lie ahead,” said Newsom in a statement.

He signed the framework Monday afternoon, leaving the Legislature to pass the bills implementing the framework in the coming days.

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