Newsom’s plan to reduce the gas tax: $400 debit cards and no tax increase

Gov. Gavin Newsom wants to combat rising gas costs by giving $400 per car to drivers and suspending an inflation-linked gas tax hike.

The governor’s two-part plan is the most recent step in discussions with the Legislature over how to offset rising gasoline costs. It is opposed to the legislative leaders’ concept.

Newsom proposes to issue $400 debit cards attached to vehicle ownership, with a maximum of two automobiles per family. There would be no income limit for eligibility.

He is forging ahead with a plan to postpone a planned July 1 increase in the state’s inflation-indexed gas tax. Additionally, the governor requests $750 million to provide three months of computer-free public transit.

According to the governor’s office, the debit cards would be issued to drivers regardless of whether they own a gas or electric vehicle.

The overall cost would be around $11 billion — a promise achievable by the state’s burgeoning fiscal surplus.

The implications: Newsom’s plan departs from the one used by Assembly Speaker Anthony Rendon and Senate President Pro Tem Toni Atkins, illuminating the budget negotiations’ deadlocks.

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Democratic leaders agreed that California should focus only on gas pricing but disagreed with Newsom on specifics. Their proposal would apply solely to California households earning less than $250,000 per year to assist its most vulnerable residents. It would be associated with persons, not automobiles.

Atkins and Rendon have also rejected Newsom’s earlier proposal for a “break” on the inflation-linked hike in the gas tax, stating that such a measure would not provide demonstrable advantages to consumers.

The gas tax rise results from a contentious 2017 agreement, with profits toward transportation projects, which many legislative Democrats are unwilling to amend. Both have broken with Newsom and opposed Republican attempts to suspend gasoline taxes.

Atkins referred to the income threshold dispute with Newsom, stating that “the Senate is committed to ensuring that state funds are directed to those who truly need assistance” and drafting “a program that delivers for suffering Californians.”

A spokesman for Rendon stated that he was still considering Newsom’s plan.

What’s next: This appears to be one of the most divisive issues in the upcoming budget negotiations. Newsom and leaders will continue to iron out the details in the months ahead.