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California budget surplus ahead of second round of stimulus checks

California budget surplus ahead of second round of stimulus checks

With a budget surplus of $75.7 billion, California Governor Gavin Newsom recently proposed a second round of stimulus for Californians. The announcement mentioned the need to support low-income Californians and Californians experiencing financial burdens due to COVID-19. The extra round of stimulus checks is part of the proposed $100 billion California Comeback Plan, proposed last Monday by Newsom. The plan proposes nearly $12 billion in direct cash payments to those largely affected by the pandemic.

Earlier in February, Newsom approved a one-time state stimulus check of $600 or $1,200 to eligible California residents, known as the Golden State Stimulus. Payments are based on 2020 tax returns filed this year and will be issued after the returns have been processed by the state. Time estimates for payments to vary based on when a person filed their tax return.

Under Newsom’s new California Comeback Plan, the Golden State Stimulus will expand with a second round of stimulus payments of $600. Dependent families, including undocumented families, may also be eligible for an additional $500 payment.

To be eligible to receive the Golden State Stimulus checks, an individual must have filed their 2020 taxes and either a California Earned Income Tax Credit (CalEITC) receiver or a Individual Taxpayer Identification Number (ITIN) submitter who earned $75,000 or less in 2020. The person must also reside in California for more than half of the 2020 tax year, be a California resident on the date a payment is made, and be ineligible to claim as a dependent.

Generally, CalEITC recipients receive $600 in payment, but those who also filed an ITIN and earned $75,000 or less in 2020 are eligible to receive a $1,200 payment. 2020 tax returns are due by October 15, 2021 submitted to receive the incentive payments.

The state budget surplus was the result of an income tax structure that collected most of the income of high-income earners in the state, as well as a surge in the stock market and a successful transition to remote work for most professionals.

The additional round of stimulus checks was also proposed, in part because of a state constitutional amendment requiring tax credits when state revenues exceed a cap on government spending.

Darya Verzhbinsky, a fourth-year UC San Diego student at Earl Warren College majoring in computer science, said the stimulus checks seemed to come too little, too late.

“I hope it makes a difference, but I also hear that it doesn’t make enough difference and that if they’re going to do it, they need to do it more often and more regularly,” Verzhbinsky said. “I don’t know if there’s that much demand for it now because things are opening up and people are getting their jobs back, but certainly in the worst of the pandemic, I think a lot of people were upset because it wasn’t enough. ”

While there has been much discussion about the need for more stimulus controls, several other economic experts echoed the same sentiments, including James Hamilton, a professor of economics at UCSD, who said stimulus controls weren’t the best move for the governor right now.

“There are times when the economy needs more fiscal stimulus, but this isn’t one of them,” Hamilton said in an article by the Union-Tribune in San Diego. “Federal spending and deficits have been huge, and monetary policy is keeping the throttle on the back burner. I think inflation and supply shortages will prove to be the big economic story for 2021. I would encourage the governor to focus on stopping the exodus of high-paying jobs from California.”

Photo courtesy of Bob Rowan for Getty Images.