Over the past several months, Californians have been getting paid.
Checks ranging from $600 to $1,100 have landed in the mailboxes and bank accounts of roughly two-thirds of state residents, part of a program known as the Golden State Stimulus.
You may have thought, as I initially did, that these payments were simply another form of Covid-19 relief. But because of an arcane California law, the state was required to send us this money — with or without the pandemic.
In 2022, the same law is expected to kick in again. That means that in all likelihood, more money is headed our way soon.
How we got here
To begin, a brief history: Californians revolted against taxes in the late 1970s.
Voters passed Proposition 13, a landmark measure that limited property tax increases, in 1978. The next year, Paul Gann, one of the proposition’s co-sponsors, suggested another tax break.
Gann proposed implementing a cap on state spending: If California’s expenditures neared a certain threshold (calculated by adjusting 1979 levels for population growth and inflation), the state would have to return funds to taxpayers in the form of a rebate.
Voters in 1979 overwhelmingly approved the measure, known as the “Gann limit,” and later amended the law to allow some of the excess revenue to also go toward funding education.
Why California has so much money
That brings us to today. Millions of Californians have lost work during the pandemic — the state’s unemployment rate is tied for highest in the nation — and a third of households here do not earn enough to meet the true cost of living in this pricey state.
Nationwide, lower-income adults have been hit especially hard by the Covid-19 economic crunch, while wealthier Americans have been left largely unscathed. That trend holds in California, where we also tax our wealthy at very high rates.
“What makes the situation unique in California is that we have this inordinate wealth and income inequality,” said Chris Hoene, executive director of the California Budget and Policy Center. “And then we have a tax structure designed to actually produce revenue from that.”
In late 2020, Gov. Gavin Newsom was planning for the fiscal year that would begin in July 2021. Projections showed that the state could soar past the Gann limit by billions of dollars.
Under state law, the governor wasn’t required to act on the limit for another two years. But Newsom was facing the prospect of a recall election in the fall.
So in January, Newsom announced the Golden State Stimulus, what he called the largest state tax rebate in U.S. history. A few months later, the state began distributing roughly $12 billion among Californians who make $75,000 or less annually.
Now, the state’s Legislative Analyst’s Office predicts that California will have a $31 billion surplus for the budget year that begins July 1, 2022. Exactly how Newsom will avoid crossing the Gann limit this time around won’t become clear until he releases his budget proposal in January.
While the Golden State Stimulus helped the Californians most affected by the pandemic, some have said it unfairly excluded the very people who contributed the most to the state’s revenue. But Newsom has recently hinted that he plans to take his cues from this year’s plan.
“I’m very proud of the historic tax rebate,” Newsom said during a news conference last month. “And I look forward to making the decision that I think is in the best interests of 40 million Californians.”
The latest on Omicron and the pandemic
What we’re eating
Chocolate pecan bars.
Where we’re traveling
Today’s travel tip comes from Bob Bruno, a reader who lives in Discovery Bay:
“California’s state route 160, the Southern branch, runs from the Antioch bridge along the Sacramento River, all the way to Sacramento. It is a lovely drive, particularly in the spring.
There are some interests along the route: The Ryde Hotel features a Sunday brunch, the town of Locke built by Chinese immigrants in 1918 and containing a beautiful garden and a gambling hall museum, pear orchards, beautiful homes, and of course the Sacramento River.
I drive it often, and love it.”
Tell us about your favorite places to visit in California. Email your suggestions to CAtoday@nytimes.com. We’ll be sharing more in upcoming editions of the newsletter.
What we’re recommending
11 new books this week.
And before you go, some good news
“Happy Days” are here again.
The actor Henry Winkler is auctioning off costumes, props and other memorabilia from his career, including his beloved character Fonzie’s leather jacket and motorcycle.
The Fonz’s complete outfit — the jacket, Levi’s jeans, white T-shirt and black boots — is expected to sell for $50,000 to $80,000 at Bonhams auction house in Los Angeles on Wednesday, KABC reports.
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