Tax Relief

Newsom’s gas-tax relief proposal has a looming deadline

Details: The department published language containing what the governor first announced two weeks ago: $400 tax refunds for vehicle owners, free statewide public transit for three months, canceling the sales tax on diesel fuel for a year and pausing the gas tax’s inflation adjustment scheduled for July 1

Legislative leaders, on the other hand, want to target relief based on income, not vehicle ownership; their proposal would limit the aid to those earning less than $250,000 in annual household income. Another legislative criticism of Newsom’s proposal is that it includes owners of electric-powered cars.

Tough timing: In order to stop the gas tax’s consumer price index adjustment from taking effect on July 1, lawmakers would need to approve that part of the plan by May 1 as an early-action budget item. (The change requires a 60-day lead time.)

Palmer said the diesel tax bill would have to be enacted by April 30 to take effect by July 1 — otherwise, the year-long pause on that tax would have to start on Oct. 1, the beginning of the following quarter.

Leaders’ reactions: Assembly Speaker Anthony Rendon said in a statement that he would have a better sense of Newsom’s proposal once April 15 tax collections arrive, adding that there are competing priorities in the budget: tax relief, infrastructure and education, among others.

Senate President pro Tempore Toni Atkins expressed similar sentiments, saying in a statement that the Capitol will review the governor’s package. “Our goal is to get relief to families and individuals that need it the most as quickly as possible,” she added.

What’s next: Because the Legislature returns from recess on April 18, that gives them less than two weeks to come to an agreement on these issues. April 29 is the deadline for policy committees to report fiscal bills to appropriations panels.

Lara Korte contributed to this report.

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