Stimulus Update: Should Californians Look Forward to Golden State Checks in 2022?
The Golden State Stimulus Fund has given low-income California residents making less than $75,000 roughly $12 billion in funds. If you thought this money was part of pandemic relief programs, however, you’re mistaken — it’s actually one of the largest state tax rebates in U.S. history, according to California Governor Gavin Newsom. It just happened to coincide with the pandemic and a governor looking to get in the good graces of residents in the shadow of a possible recall election.
How the Golden State Stimulus Fund Began
The New York Times reported on the program earlier this week, explaining a measure called the “Gann limit,” which was enacted in 1979. According to the law, proposed by Paul Gann, if California exceeds its state spending cap, yet has overage in funds derived from state taxes, it must return a portion of the money to taxpayers.
Will Californians Receive More Money in 2022?
In 2021, California has a $76 billion budget surplus. The state’s Legislative Analyst’s Office expects $31 billion in excess revenue for the fiscal year that begins July 2022, according to the NY Times. With extra money in the budget and the Gann limit in full force, it is possible California taxpayers could receive additional money in 2022.
However, according to Gann limit regulations, the governor has two years to rectify the overage before distributing funds to residents. Newsom chose to put the Golden State Stimulus into effect early, in part, because of the pandemic, but also because he was facing recall. Newsom has some time to decide the best course of action for 2022. He could choose to continue the Golden State Stimulus or find other ways to reduce the budget surplus.
Why Does California Have So Much Money?
With Silicon Valley, Hollywood and many major, big-money corporations in the state, California ranks 7th in the U.S. based on number of millionaires compared to the total population, according to Statista. This creates what Chris Hoene, executive director of the California Budget and Policy Center, described in the NY Times as “inordinate wealth and income inequality.”
He told the Times, “And then we have a tax structure designed to actually produce revenue from that.”
The tax rebates became a point of contention for some of the higher income individuals who helped produce that wealth, according to the NY Times. But Newsom hinted at plans to continue redistributing the state’s wealth to those who need it most. In a news conference in November, he said, “I’m very proud of the history tax rebate […] And I look forward to making the decision that I think is in the best interests of 40 million Californians.”
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