Newsom Proposes Sending $400 Debit Cards to All California Car Owners to Ease Pain at the Pump

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Passersby walk past a gas station, where the cheapest gas is $5.69 a gallon.
A Circle K gas station on Potrero Avenue and 17th Street in San Francisco on March 8, 2022, where regular gasoline was $5.69 a gallon — and has since gone up.  (Beth LaBerge/KQED)

Californians shouldering the nation's highest gas prices could soon receive $400 debit cards per vehicle — up to $800 — to help pay for fuel under a proposal introduced by Gov. Gavin Newsom on Wednesday.

Gas prices have soared in recent weeks, the result of pandemic-induced inflation and Russia's invasion of Ukraine. State governments across the country have been debating what to do about it, with the most popular choices being slashing fuel taxes or offering rebates to taxpayers. Last week, the governors of Maryland and Georgia signed laws temporarily suspending their state's gas taxes, while Georgia on Wednesday also offered $1.1 billion in refunds to taxpayers in a separate action.

California's average gas prices hit a new state record on Wednesday at $5.88 per gallon, more than $2 higher than it was a year ago, according to AAA. California has the second-highest gas tax in the country at $0.51 per gallon. But the state's Democratic leaders have been wary of suspending the gas tax over concern that oil companies won't pass along the savings to drivers.

Instead, they want to send money directly to taxpayers.

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The governor's office says the average California driver spends about $300 per year on gas taxes. The proposed $400 debit card would go to everyone who has a car registered with the state — including the uber-rich, people living in the country illegally, and even drivers who own vehicles that don't use gasoline. Owners with multiple registered vehicles could receive up to two cards.

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For people who don't have cars, Newsom wants the state to pay for their bus or train fare for three months. His proposal would give $750 million to transit and rail agencies, which Newsom said would be enough to give free rides to 3 million people per day. About $1.1 billion would pay to pause scheduled inflationary increases for diesel and fuel taxes this summer, and another $500 million would pay for projects that promote biking and walking.

“This package is also focused on protecting people from volatile gas prices, and advancing clean transportation,” Newsom said.

Newsom's plan must be approved by the Legislature, where Democrats dominate both the Assembly and the Senate. Democratic leaders, however, don't like the idea of giving money to rich people. They have been discussing their own rebate proposal, one that would give $200 rebates to every taxpayer, and their children, who have taxable income less than $125,000 for single filers and $250,000 for joint filers. That means a family of five would get $1,000 while a single parent with two children would get $600.

“The Senate is focused on ensuring that state money is targeted to those who actually need relief and we look forward to working with Gov. Newsom, Speaker Rendon and our Legislative colleagues to quickly develop a proposal that delivers for struggling Californians,” said state Senate President Pro Tempore Toni Atkins, a Democrat from San Diego.

A spokesperson for Democratic Assembly Speaker Anthony Rendon called Newsom’s idea “consistent with the Speaker’s goal of providing targeted financial relief to Californians most in need,” but stressed that the idea is “in the very early stages.”

Newsom's plan is similar to a separate proposal floated last week by more moderate Democrats in the state Assembly that would give every taxpayer $400, regardless of income. Assemblymember Cottie Petrie-Norris, a Democrat from Laguna Beach who supports that plan, on Wednesday urged the Legislature and Newsom to act quickly.

"The contours of the governor's proposal are a little different than what we proposed, but I would be very happy to support this," she said.

The governor's office said Newsom would be willing to negotiate with lawmakers about who can get the money, a process that could take some time to sort out.

Republicans favor a temporary suspension of the state's gas tax, arguing it's the quickest way to offer relief. Rebates like the ones Newsom is proposing take time to deliver, with the governor's office saying people could see the money by July.

“People need relief now,” said Assembly Republican Leader James Gallagher. “We've got now, like, four different competing plans amongst the Democrats. These guys are going to negotiate against themselves for weeks to months and who knows what we're going to get.”