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Business and Labor

Top California Democrats in a stalemate over gas rebates

An image of Gas Pumps
Andrew Nixon | CapRadio
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California has the highest gas prices in the nation, Wednesday, May 18, 2022.

Aurora Chang leans over and flicks the gas pump off before the tank of her gray sedan is full. She gestures at the Safeway Gas sign that blares $5.69 in red numbers. It’s a good deal at 20 cents below Sacramento County’s average price, but still too high for Chang.

“Usually, I like to fill it up,” she says. “But with that price, now it’s probably going to take me more than $80 to fill it up.”

The Sacramento grandmother is the main source of transportation for her two grandchildren and two nephews. Getting them to and from school and after-school activities means she needs to fill up twice a week.

“It’s a lot of driving for me,” she says. With fuel prices stuck near record highs and inflation at a 40-year high, Chang is feeling the pinch. State leaders say they want to provide relief but have been in a stalemate that has dragged on for two months.

State lawmakers and Governor Gavin Newsom have proposed using a chunk of California’s historic $97.5 billion budget surplus to send out tax rebates to address high gas prices and inflation.

But leaders are divided over the details.

In March the governor proposed a $400 rebate in the form of a debit card per registered vehicle — up to $800 — for drivers.

Top Democrats in the legislature balked at the idea of tying relief to car ownership, pointing out that Newsom’s proposal could mean a person with two luxury vehicles would get $800 while a family that can’t afford a car wouldn’t get any cash.

Instead, Senate President pro Tem Toni Atkins (D–San Diego) and Assembly Speaker Anthony Rendon (D–Lakewood) want to target relief to individuals who earn up to $125,000 or joint filers up to $250,000. They want to send each person $200, with an additional $200 per dependent.

“Senate Democrats do not believe a rebate tied to car ownership does the job,” Atkins said in a statement Thursday. “That plan leaves out non-car owners — including low income and elderly Californians, who are also impacted by the current high costs of consumer goods and are also deserving of relief.”

But Newsom doubled down on his proposal when he presented his revised budget last week, explaining that providing relief to car owners would be speedier and would cover some who were left out of last year’s Golden State Stimulus program, which sent checks of $600 or more to lower-income taxpayers.

“My interest is to get the money out as quickly as possible. People are feeling deep stress, deep anxiety,” Newsom said May 13. The governor believes hiring a third party to distribute funds using DMV information would get money to people within weeks. He said it could take months for the Franchise Tax Board to distribute rebates.

The board is currently focused on handling tax refunds. Newsom said the tax board is still sending out “a modest number” of checks from last year’s Golden State Stimulus.

One thing that’s clear is that top Democrats in California do not want to pause the gas tax, which at 51.1 cents per gallon is the highest in the nation. Some Democrats argue nothing would stop oil companies from keeping prices high and pocketing the difference.

In January, Newsom proposed halting a scheduled increase in the gas tax but dropped that proposal in his revised budget. But Republicans and a handful of moderate Democrats continue to call for a gas tax holiday.

Assemblymember Kevin Kiley (R–Rocklin) introduced a bill in January to suspend the gas tax for six months.

“I just don’t know why this is so hard,” Kiley told reporters in March. “We have the bill … we could pass it now, it could be signed in a few days and starting next week, people could see the impact.”

After the Placer County Republican tried multiple times to force a vote, Democrats hijacked the bill, attempted to change the language, and shelved it for the year.

The bipartisan Problem Solvers Caucus has since introduced another bill to suspend the gas tax. Lead author Adam Gray (D–Merced) said it would require oil companies to pass savings from the gas tax on to consumers.

Kiley, who’s running for Congress in Northern California, supports any form of tax relief. But he says while Democrats have been going back and forth, Californians have continued to pay the highest gas prices in the country.

“Our caucus wants to provide relief, but its political choices by our colleagues on the other side of the aisle and this governor that has so far stopped that from happening,” he said.

In fact, California’s gas tax is scheduled for its annual increase — of 2.8 cents this year, to 53.9 cents — on July 1.