On Monday, California’s Governor Gavin Newsom had awesome news for the Golden State. He announced that the state had a budget surplus of more than $75 billion. This was unexpected, good news. The surplus was a result of a booming stock market and tax revenues were much higher than what was expected in a year that was severely hit by the coronavirus pandemic.
Last year state officials were worried that there would be a huge budget deficit. Assemblyman Chad Mayes (I) told the Hill in April that they had all agreed that they were going to take a hit because the state was heavily dependent on high-income earners.
However, the stock markets rebounded, and its rallies helped to repair the gap. The state is also dependent on capital gains tax and the strong year in the market helped reduce the deficits. Two IPOs: DoorDash and Airbnb also added revenues. Another unexpected gain for California’s budget was that there was a higher than usual revenue from sales tax as well.
On Monday, Governor Newsom said that he is preparing to share the bounty with the state. He would use the surplus to fund the biggest ever economy package for Californians. He is proposing a $100 billion package. Some of the major proposals include
- $12 billion in direct payments; $600 to most residents; extra $500 to resident with dependents for families earning below $75,000 a year
- A major assistance package to cover 100 percent past overdue rents
Newsom will be announcing midyear budget revisions on Friday. He will also lay out the rest of the proposed package on the same day. Tax rebates of up to $1,100 will also be given to millions of residents.
On Monday, the U.S. Treasury had announced that the state of California would receive $27 billion from the recent federal coronavirus spending plan.