CA Gas Rebate: Newsom Proposes Relief For All As Prices Rise

SACRAMENTO, CA — Gov. Gavin Newsom wants help Californians offset the cost of skyrocketing fuel prices with a tax rebate, he announced at his annual State of the State address Tuesday.

The Golden State is home to the most expensive fuel in the nation. On Wednesday, the average price for regular fuel shot up to $5.57 per gallon.

The Democratic governor said that he plans to submit a revised budget to the state Legislature to "put money back in Californians' pockets to address rising gas prices."

Newsom offered sparse details about the proposed rebate, but officials from his administration said it could pay out billions of dollars in relief and be accessible to California drivers with a vehicle registered in the state, CalMatters reported.

His announcement came down the same day President Joe Biden announced a ban on Russian oil imports to the United States in response to the invasion of Ukraine.

"This is a step that we're taking to inflict further pain on [Russian President Vladimir] Putin," Biden said Tuesday morning. "But there will be cost as well here in the United States."

READ MORE: Russian Oil Ban: What It Could Mean For Gas Prices In CA

The move is almost certain to inflict the most pain on Golden State residents, who pay significantly more than anyone else in the nation. The national average on Tuesday was $4.25 per gallon for regular gas.

Thanks to inflation, California's fuel prices were already climbing to unseen levels long before Russian forces set foot in Ukraine — but prices have continued to spiral since the war erupted.

With prices rising 9 to 13 cents a day, the state is likely to smash the $6 average price threshold by next week.

To address inflated prices, Newsom in January proposed a gas tax holiday, which would suspend an increase to California's gas tax increase in July — but legislators on both sides of the political divide have expressed the need to do more.

READ MORE: CA 'Gas Tax Holiday' Proposed Amid Surging Fuel Prices

“A gas tax rebate in July will do exactly nothing for drivers who are currently struggling with the highest gas prices in history, being forced to choose between driving their kids to school or putting food on the table," said Assembly Leader James Gallagher (R-Yuba City), according to CalMatters.

Democratic leaders of the state Assembly and Senate issued a statement Tuesday evening in support of a gas rebate.

"Californians are rightfully upset at the skyrocketing cost of fuel. Gas, food, & other prices are up. Our focus cannot be a small cut to the gas tax that might not get passed on to consumers. The #CALeg is working on a solution to provide substantial relief for you & your family," California Senate President Pro Tem Toni Atkins tweeted.

The Legislature would have to approve both of Newsom's proposals for a gas rebate and the gas tax pause in July for them to take effect.

Newsom also tied California's rising gas prices to his agenda for the state to move away from fossil fuels.

"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," Newsom said. "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."

Newsom's idea to give Californians another rebate could also satisfy Proposition 4, commonly known as the Gann Limit, which could kick in later this year due to the state's estimated $45.7 billion budget surplus.

That number exceeds the state's constitutional limit, which restricts the amount of tax revenue the state can spend. The limit required lawmakers to return some of the excess funds to taxpayers as a rebate.

Last year, the state also hit that threshold, prompting Newsom to satisfy the Gann Limit by packaging it as the $600 "Golden State Stimulus." Before 2021, the limit had not been reached since 1986, Bloomberg reported.

It remains unclear whether a gas tax rebate will be approved by the Legislature or if it would come out of any potential money returned through Proposition 4.

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