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Governor Newsom proposes tax rebate for Californians as state deals with nation’s highest gas prices

The Democratic governor’s announcement in his “State of the State” address Tuesday night comes as Californians brace for further price hikes after Russia’s invasion of Ukraine.

Newsom said he is planning to submit a revised budget to the state legislature that would “put money back in Californians’ pockets to address rising gas prices,” but he did not immediately offer any details of how much a rebate would be or when he hopes it could hit bank accounts.

Nationwide the average price for a regular gallon of gas reached $4.17 on Monday — breaking the previous record set in 2008 — but in California, the average price is now $5.44, according to AAA.
Gas prices are likely to edge even higher following President Joe Biden’s announcement on Tuesday that the administration is banning imports of Russian oil, natural gas and coal to the United States to bring further pressure on Russian President Vladimir Putin to halt his war in Ukraine. Back in January, Newsom proposed pausing the automatic annual increase of the state’s controversial gas tax — enacted in 2017 to help raise money for transportation projects like road repairs. On Tuesday night, he said, “We must go further.”

The Democratic-controlled state legislature will have to approve Newsom’s proposals both for a tax rebate and a pause to the annual increase to the state’s gas tax. The total amount of the rebate that Californians could receive would also have to be negotiated by Newsom and lawmakers, based in part on estimates of what the state’s surplus will be this year, which are likely to be revised.

In his address, Newsom tied his desire to provide relief from gas prices to the aggressive agenda that he has advanced in California to shift away from reliance on fossil fuels, pushing back on the argument from many Republicans for more domestic oil production.

“At a time when we’ve been heating up and burning up, one thing we cannot do is repeat the mistakes of the past by embracing polluters: drilling even more oil, which only leads to even more extreme weather, more extreme drought, more wildfire,” he said, alluding to the catastrophes that California has dealt with as a result of the climate crisis. “We need to be fighting polluters, not bolstering them. And in so doing, freeing us once and for all from the grasp of petro-dictators.”

The governor’s announcement was also an acknowledgment of the political peril that many of his fellow California Democrats are facing in November as they contend with voters who are angry about gas prices and inflation.

Though Newsom handily defeated the effort to remove him from office last year and appears to be gliding toward reelection in 2022, rising prices are already reshaping the conversation in some of the nation’s most competitive congressional races in the state. And as state Republican lawmakers press for a suspension of the 2017 gas tax, Democrats are nervous about the potential backlash over their decision to pass it. (In an earlier round of this battle, voters recalled Democratic state Sen. Josh Newman of Fullerton in 2018 over his vote for the bill to increase the gas tax, though he ultimately won the seat back).
Rather than dwelling on those political vulnerabilities, Newsom on Tuesday sought to address anxiety about gas prices by highlighting policies that he has enacted to shift away from oil and gas, including his 2020 executive order requiring all new cars and passenger trucks sold in California to be zero-emission vehicles by 2035.
“Our nation-leading climate investments — almost $38 billion — will ensure that other innovations will surely follow not by re-creating the 20th century, by extracting more oil, but by extracting new ideas, drilling for new talent by running our economy on a carbon-free engine,” he said.

Criticizing GOP governors

Newsom, who has increasingly sought to raise his national profile, has been outspoken about his contempt for controversial maneuvers by Republican leaders around the country, a topic he broached Tuesday night.

Offering an implicit critique of Republican Govs. Ron DeSantis of Florida and Greg Abbott of Texas, he criticized “powerful and loud voices” that are “stoking fear and seeking to divide us.” And he mocked “that version of education reform being promoted in some states where they’re banning books, where you can sue your history teacher for teaching history and where you can’t say the word ‘gay.'”

California would continue to move forward, Newsom said, by “embracing diversity” and “seeking common ground,” not by “exploiting division with performative politics.”

Last month, Newsom criticized Abbott’s order instructing his state’s Department of Family and Protective Services to investigate the use of gender-affirming treatments and procedures for transgender children, which Abbott had issued after Texas Attorney General Ken Paxton released a legal opinion stating that they are a form of child abuse.
“Trans kids and their families should be celebrated – not targeted by the state,” Newsom tweeted in response to an article referencing Abbott’s order. “They are heroes. This order is a direct assault on their wellbeing,” he said, adding that “California’s door” would be open to fearful families in Texas.
Newsom has also slammed a bill in Florida, approved by lawmakers on Tuesday and sent to DeSantis’ desk, that would ban certain instruction about sexual orientation and gender identity in the classroom.

Newsom has argued that the bill, which opponents have dubbed the “Don’t Say Gay” bill, sends “a clear — and disgusting — message to kids across the state: You are not welcome here.”

This story has been updated with more details of the governor’s address.

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