With a $75.7 billion budget surplus, California Governor Gavin Newsom recently proposed a second round of stimulus checks for Californians. The announcement cited a need to support low-income Californians and Californians facing financial burdens because of COVID-19. The additional round of stimulus checks is part of the proposed $100 billion California Comeback Plan, proposed by Newsom last Monday. The plan proposes nearly $12 billion in direct cash payments to those largely affected by the pandemic.
Earlier in February, Newsom approved a one-time state stimulus check payment of either $600 or $1200 to eligible California residents, otherwise known as the Golden State Stimulus. The payments are based on 2020 tax returns, filed this year, and will be issued after the returns are processed by the state. Time estimates for payments vary based on when an individual filed their tax returns.
In Newsom’s new California Comeback Plan, the Golden State Stimulus will be expanded upon to include a second round of stimulus payments of $600. Families with dependents, including undocumented families, may also be eligible for an additional payment of $500.
To be eligible to receive the Golden State Stimulus checks, an individual must have filed their 2020 taxes and be either a California Earned Income Tax Credit (CalEITC) recipient or an Individual Taxpayer Identification Number (ITIN) filer who made $75,000 or less in 2020. The individual must also live in California for more than half of the 2020 tax year, be a California resident on the date a payment is issued, and cannot be eligible to be claimed as a dependent.
Generally, CalEITC recipients will receive $600 in payment, but those who also filed with an ITIN and made $75,000 or less in 2020 are eligible for a $1200 payment. 2020 tax returns must be filed by Oct. 15 2021 to receive the stimulus payments.
The state budget surplus was a result of an income tax structure that collected the majority of its revenue from high-income earners in the state, as well as a surge in the stock market and a successful transition to remote working for most professionals.
The additional round of stimulus checks was also proposed in part due to a state constitutional amendment that requires tax rebates when state revenues exceed a maximum on government spending.
Darya Verzhbinsky, a fourth-year UC San Diego student from Earl Warren College majoring in computer science, said that the stimulus checks seemed to be too little too late.
“I hope that it makes a difference but I also hear that it doesn’t make enough of a difference and that if they’re going to do them, they should do them more often and regularly,” Verzhbinsky said. “I don’t know if now there’s as much demand for them because things are opening up and people are getting their jobs back, but definitely in the worst of the pandemic, I think a lot of people were upset about it not being enough.”
While the need for more stimulus checks have been widely debated, several other economic experts also echoed the same sentiments, including James Hamilton, a professor of economics at UCSD, who said that stimulus checks at this time was not the best move for the governor.
“There are times when more fiscal stimulus is what the economy needs, but this isn’t one of them,” Hamilton said in a San Diego Union-Tribune article. “Federal spending and deficits have been massive, and monetary policy is keeping the accelerator floored. I think inflation and supply shortages will turn out to be the big economic story for 2021. I would encourage the governor to focus on trying to stop the exodus of high-paying jobs from California.”
Photo courtesy of Bob Rowan for Getty Images.