Remember the Golden State stimulus checks? Well, others might land in your bank account in the near future.
That’s because California is – again – overflowing with cash and will likely have a $ 31 billion budget surplus next year, according to a report released Wednesday by the Independent Office of the Legislative Analyst. And because the state is prohibited from spending more tax dollars per Californian than in 1978, once adjusted for inflation, it has only a few options for managing most of the economy. windfall: reduce taxes; issuance of tax rebates; send it to schools and community colleges; or earmark it for certain purposes, such as infrastructure.
Kern lawmakers have conflicting notions about how the money should be spent, whether it’s handing out checks to individual taxpayers or investing in long-term investments. Meanwhile, Governor Gavin Newsom has his own ideas.
During a visit to the overdue ports of Los Angeles and Long Beach on Wednesday, Newsom said it plans to “dramatically increase our one-time infrastructure investments” in the budget proposal it will send to lawmakers to. state in January. He also suggested that another round – or two – of stimulus checks could be underway.
“How we defined this historic surplus last year, in the same way we will define our approach this year,” said the governor.
Newsom and state lawmakers agreed to a record $ 262.6 billion spending plan for the fiscal year that began July 1, which included $ 12 billion in stimulus payments and stimulus payments. unprecedented investments in education, homelessness and the environment. Newsom on Wednesday unveiled the first 18 projects that will receive funding from the $ 6 billion broadband package.
Much of the additional income came from one-time funding sources, which is why many California schools still face yawning budget deficits. However, the Office of Legislative Analysts predicts that California can afford to increase its annual spending by $ 3 billion to $ 8 billion in fiscal year 2025-2026 – a prospect that doesn’t seem to suit Republicans well.
Deputy Chairman of the Assembly’s Budget Committee, Bakersfield Republican Vince Fong, stressed in a statement last week that the surplus does not mean the state’s economy is doing well. He suggested making long term investments.
“State leaders must prioritize excess revenue to invest in critical issues that impact all Californians – needed water storage, a reliable supply chain, and permanent tax relief -” to build a healthy economy and keep Californians and businesses in our state, ”Fong said.
But State Senator Melissa Hurtado D-Sanger said on Wednesday residents needed the cash now, especially with prices rising in grocery stores. She said it’s “always good to give back to the hardworking people in California” and that benefits everyone as the state’s economy shows signs of recovery.
“I think people… are willing to spend the money,” Hurtado said. “They are ready to move forward, and I think more stimulus money will help.”
According to the Legislative Analyst’s Office, there are several main reasons California is swimming in money even though 26% of residents are functionally unemployed and the state’s poverty rate is the highest in the country when the cost is of life is taken into account. They include massive capital gains for California’s wealthiest residents amid the pandemic and record consumer spending as residents use state and federal stimulus controls.
California businesses posted a record $ 217 billion in taxable sales in the second quarter of 2021, according to figures released Tuesday by the State Department of Tax and Royalties Administration.
Moneywise Wealth Management co-owner David Anderson in Bakersfield said by text Wednesday that not everyone in the state really needs a stimulus check. From his perspective as a financial advisor, there is a simple test of who does it and who doesn’t.
“If they give checks to the right people, there won’t be a lot of advice on what to do with them, because… they will spend it on their immediate needs,” Anderson said. “If people need advice on what to do with the money, they probably don’t need the stimulus check.”
Californian John Cox contributed to this report.