Newsom proposes $400 payments to California drivers to offset rise in gas prices

Gov. Gavin Newsom released his proposal Tuesday to provide direct payment to Californians dealing with record-setting gas prices, while also providing funding to lower the cost of public transit.

Under the $11 billion proposal, Californians would get a debit card with $400 per registered vehicle — including electric vehicles, but limited to two total vehicles — in their name in the state. Newsom's office says the average Californian spends around $300 a year in gas taxes. There is no income cap on the program.

The plan also includes $750 million to lower the cost of public transit and $600 million to pause a part of the sales tax rate on diesel for one year, but no other support for residents without a vehicle registered in California.

Newsom said the proposal would both protect “people from volatile gas prices, and [advance] clean transportation” by including funding for “electric vehicle incentives and charging stations, and new funding for local biking and walking projects.”

"That direct relief will address the issue that we all are struggling to address and that’s the issue of gas prices — not only here in our state but of course all across the country," Newsom said in a Twitter video  announcing the plan.

The governor hinted at a plan in his State of the State address earlier this month, but didn't provide details until Tuesday. The state Legislature would have to approve the governor’s proposal. If it does, payments could go out as early as July.

Nearly two dozen legislative Democrats released their own plan last week that would give $400 rebates to all California taxpayers, regardless of whether or not they have a vehicle registered in their name. Lawmakers say the $400 is the equivalent of a one-year suspension of the 51-cent gas tax for a driver with a 15-gallon gas tank who fills up weekly.

Assembly Speaker Anthony Rendon (D–Lakewood) and Senate President Pro Tem Toni Atkins (D–San Diego) unveiled a separate plan that would send direct payments to families  who make less than $250,000, according to the Los Angeles Times.

Republicans have called on lawmakers to suspend the state's gas tax, but Legislative Democrats have largely balked at the idea, arguing it provides needed money for roads and infrastructure. Others have pointed out that if the gas tax was halted, there would be nothing stopping oil companies from keeping prices high and pocketing the difference.

Newsom’s plan would provide nearly a billion dollars to pause part of the sales tax rate on diesel fuel for one year, as well as inflation on gas and diesel excise tax rates.

According to AAA, the average price for a gallon of gas in California is $5.87, up $1.12 from a month ago.