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State leaders in California have approved a $100-billion plan to further the economic recovery in California that includes new stimulus checks for residents, rent relief and grants to businesses.
First proposed back in May, California Gov. Gavin Newsom signed the legislation July 12 that reflects the majority of the state’s 2021-2022 state budget agreement. The budget is part of Newsom’s “California Comeback Plan” aimed to aid the state’s economic recovery from the coronavirus pandemic.
According to Newsom’s office, the plan provides immediate cash relief to middle-class families and businesses hit hardest by the pandemic, “creating the biggest state tax rebate in American history and the largest small business relief package in the nation.”
Newsom claimed that the plan will be partially funded through a “surge in state revenue” in addition to federal recovery funds and a resurgent economy. California is a state with progressive income tax, meaning that tax rates increase the further up the income scale you go. These rates rise and fall more dramatically than other taxes. Capital gains, in particular, can drive much of the change in these tax rates.
Cal Matters, a website dedicated to explaining how California’s state capitol works, claims that the economic recovery from the pandemic saw higher earners getting back to work much more quickly than low-income workers and that taxing wealthier workers at a higher rate has given the state the resources to pay for the benefits that Newsom is now transferring through next year’s budget.
This has been realized through what Newsom claimed as a $75.7 billion surplus which will help to pay for one of the most ambitious state economic stimulus plans in history. Newsom added that “the budget is built on a strong fiscal foundation that includes over $25 billion in reserves, pays off educational deferrals and continues to pay down long-term retirement debts.”
The plan will see two out of every three Californians receive a “Golden State Stimulus check” in the form of the biggest state tax rebate in American history. Newsom’s office claims that nearly two-thirds of residents now qualify for a stimulus check of $600 and qualified families with children will receive an additional $500.
The plan also includes $5.2 billion to help low-income renters and landlords, covering 100% of back-rent and all prospective rent for several months into the future. Newsom also stated that $2 billion will be allocated for past-due water and utility bills and more money for tenant legal assistance.
For small businesses, the plan will also provide an additional $1.5 billion in direct grants for California’s small businesses including $120 million towards a grant program to incentivize businesses to relocate to the state.
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Last updated: July 25, 2021
This article originally appeared on GOBankingRates.com: California to Issue More Stimulus Checks as Newsom Signs $100-Billion Recovery Plan