Source: Politics<\/p>\n
OAKLAND \u2014 Nothing smooths out political turbulence like having money to spend.<\/p>\n
California Gov. Gavin Newsom embarked on a cross-state road show Monday to trumpet the fruits of an astonishing $75.7 billion state surplus thanks to soaring capital gains during the pandemic. His first order of business: tell Californians he wants to give them cash and pay some of their utility bills and back rent.<\/p>\n
The stimulus play demonstrates how an unexpected windfall offers the Democratic governor a powerful tool to ward off a recall threat. Checks would arrive in voters\u2019 mailboxes not long before ballots do this fall.<\/p>\n
\u201cIt\u2019s very significant, and it dovetails into the general perception that we are coming out of the pandemic, the worst is behind us, the future looks brighter as evidenced by the checks the public will soon receive,\u201d former Gov. Gray Davis, who was recalled in 2003, said in an interview Monday. \u201cIt all flows into the same narrative that the problems are mostly behind us today and will be substantially behind us come this fall.”<\/p>\n
California’s record windfall is a product of its prosperous tech sector, high share of professional workers and steeply progressive tax structure. While unemployment remains higher in California than in most states because of job losses in its travel and service sectors, upper-income earners had a boom year as they adapted to remote work and enjoyed another surge in the stock market.<\/p>\n
The windfall is so great that it is likely to trigger a 1979 vestige of California’s anti-tax movement that hasn’t been invoked for more than three decades. Under a constitutional spending cap known as the “Gann Limit” after fiscal conservative Paul Gann, the state must refund taxes and direct more money to schools once revenues top a certain level.<\/p>\n
Besides the surplus, Newsom touted $26 billion in direct state aid from the federal stimulus plan that Democrats passed in March. He’s including that in a $100 billion package he’s labeling his “California Comeback Plan.” Senate Minority Leader Mitch McConnell suggested in December that the federal package would “supply the Governor of California with a special slush fund.” It drew new attacks on Monday after Newsom’s announcement.<\/p>\n
“This is one more reason why borrowing and sending tens of billions to California was a crying shame \u2014 and why every Republican in Congress opposed it,” Sen. Mitt Romney <\/a>(R-Utah) said on Twitter<\/a>.<\/p>\n California’s strong budget marks just the latest difference between the 2021 recall election and the one 18 years ago<\/a>. While many people remember that rolling blackouts soured voters on Davis, the state\u2019s rickety finances may have been the final straw. Staring down a record budget deficit, the Democrat cut spending and then made the politically perilous decision to enact a California vehicle tax hike \u2014 essentially the opposite of what Newsom is proposing by giving cash back to residents.<\/p>\n \u201cGray Davis was never in a position to play Santa Claus,” his former press aide Steve Maviglio said.<\/p>\n Newsom sidestepped a question Monday about how the proposal might buttress his efforts to defeat an all-but-certain recall vote. Instead, he returned to a regular theme of touting California\u2019s minuscule coronavirus rate, its brimming budget and its accelerating pace of job creation. Those are all pieces of evidence for his central pitch to voters of a revivified California \u201croaring back\u201d from the pandemic. Stimulus checks give more weight to that argument.<\/p>\n It didn’t take long for Republican recall backers to take credit, with some already dubbing it the “Recall Refund.” “Chalk another one up for the pressure of the recall on Gavin Newsom\u2019s policies,” stated an email from the official proponents.<\/p>\n