Newsom proposes $11B relief package for Californians grappling with high gas prices

As Californians continue to contend with the highest gas prices in the country, Gov. Gavin Newsom (D) proposed an $11 billion package on Wednesday aimed at providing residents with significant relief.

“We’re taking immediate action to get money directly into the pockets of Californians who are facing higher gas prices as a direct result of [Russian President Vladimir] Putin’s invasion of Ukraine,” Newsom said in a statement, noting the package aims to protect residents from volatile gas prices. 

The governor’s proposal calls for $9 billion in tax refunds to Californians in the form of $400 direct payments per vehicle, limited to two vehicles, the news release from the governor’s office said. The package also includes an additional $2 billion in broader relief mechanisms. 

As of Wednesday afternoon, the American Automobile Association showed average gas prices of $5.875 per gallon statewide, with the highest prices rising to $6.605 per gallon in Mono County, the eastern gateway to Yosemite National Park. California’s gas prices tend to be greater than those of the rest of the country due to a number of factors, including higher taxes and stricter emissions laws. 

The tax refunds would come to registered vehicle owners in the form of $400 debit cards. The average Californian driver spends about $300 in gas excise taxes over the course of a year, Newsom’s office said.

Eligibility would be based on vehicle registration, rather than tax records, in order to include seniors who receive Social Security disability income and other low-income non-tax filers, according to the governor’s office. The refunds do not include an income cap, as the proposal intends “to include all Californians who are facing higher prices due to the cost of oil,” the news release said. 

In the $2 billion segment of the relief package, Newsom proposed $750 million in incentive grants to transit and rail agencies, for the purpose of providing free rides to Californians for three months. This would mean that about 3 million residents who take public transportation daily would not have to pay a fare every time they ride during this period, according to the governor’s office.

Also included is $600 million to pause a portion of the sales tax rate on diesel for one year, as well as $523 million to pause the state’s inflationary adjustment to gas and diesel excise tax rates, Newsom’s office said. 

In addition, the package also calls for $500 million in projects that promote biking and walking throughout the state.

The proposal also seeks to fast-track a $1.75 billion portion of a $10 billion zero-emission vehicle package that the governor announced earlier this year. 

Advancing these plans, which include greater investments in zero-emission vehicles and associated infrastructure, would help reduce the state’s dependence on oil and save money for Californians, Newsom’s office said.