SACRAMENTO — Moving quickly to return California's record tax bounty, Gov. Gray Davis on Thursday proposed sending $150 checks to every income taxpayer in the state, and $300 to couples who filed joint returns for 1999.
The governor said rebate checks would arrive this fall, about election time, if legislators approve the plan. The rebates would total $1.76 billion, and go to everyone who paid income taxes in 1999--about 12 million Californians. An additional $154 million would go to elderly people on fixed incomes.
"The success of this economy has produced an enormous surplus," Davis said. "It is only fit and appropriate that we return some of that to the people who created it."
However, as Davis and legislators begin to wrangle over the 2000-01 budget, the governor appears to be headed for a fight over how best to spend a surplus of historic dimensions--$11 billion to $16 billion.
Much of the pressure will come from fellow Democrats who are seeking to use the bulk of the bounty for schools, social services and public works projects such as freeway construction to ease gridlock.
In their budget plan, Senate Democrats have offered no major tax cuts so far. Assembly Democrats are proposing a variety of breaks for businesses and low-income people. But their opening tax cut proposals amounted to $1 billion, half of what Davis is calling for.
"It is certainly more than what we wanted," Assembly Speaker Bob Hertzberg (D-Sherman Oaks) said of Davis' $1.91-billion plan. "What about the working mother stuck in traffic? Would she rather get home to her kid, or get an extra $50?"
Under Davis' proposal, all income tax payers, including the wealthiest, would receive full rebates. Low-income residents stand to receive little or nothing, a factor that is sure to disturb many Democrats.
A family of four earning $35,000 or less, for example, pays no state income taxes, and thus would receive no rebate. A single parent with one child making $31,000 a year also pays no state income taxes, and would not be in line for a rebate. People who paid less than $150 in income taxes would receive rebate checks equaling the sums they paid.
"There is a group of people who are totally left out," said Jean Ross of the liberal California Budget Project. "They may not be paying income taxes. But they are paying all the other state taxes."
