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California Democrats Offer $400 Tax Rebate to Offset Gas Prices

March 17, 2022, 12:05 AM

All Californians who file a tax return would get a $400 rebate to offset the state’s gas tax and rising prices, under proposal from a group of state Assembly Democrats.

The 10 Democrats and one independent member want the rebate to be part of the state budget that is being negotiated over the next few months. They will release more details at a Thursday news conference.

“Many Californians are feeling severe financial pain at the pump and looking to California’s leaders for help,” Assemblywoman Cottie Petrie-Norris said in a news release. “We believe a rebate is the best approach to directly put money in people’s pockets.”

The group’s proposal is the latest California leaders are floating to address rising gas prices.

Democratic Gov. Gavin Newsom has said he wants to suspend an annual inflation adjustment to the state gas tax and offer a tax credit for car owners. Republican lawmakers are calling for a suspension of the entire 51-cent-per-gallon excise tax, and Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon said last week they will announce details of broader tax relief plans soon.

Drawing money for the tax rebates from the general fund, rather than suspending the gas tax entirely, keeps gas tax revenue flowing for transportation projects as intended, the Democrats said. And if they opt to suspend the excise tax, the lawmakers said they have no guarantee the oil companies will pass savings on to consumers.

The proposal’s $9 billion price tag also puts a dent in a multibillion dollar surplus, helping to stay under a constitutional spending limit set in the 1970s. Strong revenues are triggering the limit, requiring lawmakers to spend the surplus by cutting taxes, issuing tax rebates, or spending it on specific items like education or infrastructure.

To contact the reporter on this story: Laura Mahoney in Sacramento, Calif. at lmahoney@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergindustry.com; Alex Clearfield at aclearfield@bloombergindustry.com