ALAMEDA COUNTY, Calif. — Gov. Gavin Newsom previewed a portion of his upcoming budget proposal Monday, beginning with a stimulus plan that would give low and middle-income families a direct payment under an expansion of the Golden State Stimulus.
His plan would provide $600 to taxpayers that make less than $75,000 a year. The governor said he expects two out of every three Californians will qualify, including 80% of workers. Families with children could qualify for an additional $500.
The announcement arrives even as $1 billion of Golden State Stimulus money for the first round of payments is left unclaimed, with some people perhaps unaware that they are eligible for the $600 direct payments.
Families who are undocumented and pay taxes could also qualify for an additional $500.
“They were left out of the federal support they won’t be left out of the state,” explained Newsom.
The budget proposal came after the state found itself with a $75.7 billion surplus, a massive turnaround after the state projected a $54 billion deficit from the pandemic. Newsom called it "the biggest economic recovery package in CA’s history - the $100 billion California Comeback Plan. California will roar back from this pandemic."
He attributed the surplus to California’s wealthiest residents who fared well during the past year and capital gains taxes. His proposal would redistribute the money to those who struggled throughout the pandemic.
“California’s economic success, our economic recovery is predicated on ending this pandemic. We need to be mindful this disease didn’t take Mother’s Day off and it isn’t taking the summer off. It’s as deadly as it’s ever been,” said Newsom.
There is also a plan to provide $5 billion in rental and utility assistance to low-income residents. It would help cover back rent and future payment.
“This is not an insignificant announcement. It’s unprecedented, as I said in California history, but that’s rhetoric and that often gets lost. Direct stimulus checks going into people’s pockets, that direct relief, that’s meaningful,” said the governor.
"This will get money into people's hands, said Dr. Alan Gin, a professor of economics at the University of San Diego.
GIn said that these direct payments to two out of three Californians would provide a catalyst to rev up the economy, especially after so many small businesses went under during the pandemic.
"It is effective in the sense that we need a jolt to get things going," he told News 8, adding that, hopefully, an anticipated burst of spending would ultimately encourage entrepreneurs to come back and create new businesses
"And then that will create the employment base to allow the economy to advance further in to the future," Gin said.
Newsom is likely facing a recall election later this year. His critics, and potential challengers, have denounced the governor’s stimulus proposal. Although state law requires rebates for a surplus of this magnitude, Newsom acknowledged his plan goes beyond the requirements but has denied any connection to the recall.
“This is all on the basis of the recovery that California is already experiencing,” said Newsom. “It’s on the basis of the revenue that’s coming in historic terms in the state of California and that’s because we are defeating, and we are successfully applying strategies to address this pandemic.”
These proposed cash payments were triggered in part by an amendment to the state's constitution passed by voters in 1979, requiring rebates when state revenues exceed a certain limit on government spending.
WATCH RELATED: Newsom looks back on where California has come from a few months ago (April 15, 2021)