AP Photo/Rich Pedroncelli
- California Gov. Gavin Newsom said on Monday the state has an unexpected $75 billion budget surplus.
- Newsom said he plans on giving the surplus back to residents in the form of stimulus aid and debt relief.
- The "Golden State Stimulus" may send $600 checks to middle-income people and $500 checks to families with dependents.
- See more stories on Insider's business page.
At the beginning of the pandemic, California Gov. Gavin Newsom predicted his state would end up with a deficit of $54 billion. Instead it has a $75 billion surplus, and that could mean stimulus payments for Californians.
On Monday, Newsom announced that California has a $75 billion budget surplus which he plans to give back to the state's residents in the form of $600 checks for middle-income people and $500 checks for families with dependents, part of what he calls the Golden State Stimulus.
Along with direct aid to families, $27 billion of the surplus would go to K-12 schools and community colleges, while $11 billion would go toward debt payments, for instance paying 100% of back rent for low-income renters.
"California's recovery is well under way, but we can't be satisfied with simply going back to the way things were," Newsom said in a statement. "We are tripling the Golden State Stimulus to get money in the hands of more middle-class Californians who have been hit hard by this pandemic."
The Golden State Stimulus was announced earlier this year, but following the news of the budget surplus, Newsom said he was extending the scope of the payments to apply to middle-income residents, not just low-income residents.
-Gavin Newsom (@GavinNewsom) May 10, 2021
So how did California end up with so much money? The New York Times reported that as the state relies heavily on income tax revenue, the majority of that comes from wealthy residents, and they haven't stopped making money during the pandemic. They benefitted from stock-market success and have mainly been able to work from home while lower-income residents had to work in person in places like grocery stores and warehouses.
Along with the $75 billion surplus, California is also set to receive $26 billion from President Joe Biden's $1.9 trillion stimulus, and some Republican lawmakers were quick to point out that the aid isn't needed in light of the state's windfall.
"This is one more reason why borrowing and sending tens of billions to California was a crying shame - and why every Republican in Congress opposed it," Sen. Mitt Romney of Utah wrote on Twitter.
But Newsom's office said the surplus will provide "immediate relief to those who need it most" and will help fund the governor's "California Comeback Plan," with more details of the plan coming later this week.
A Republican-led effort within California has resulted in the scheduling of a recall election for Newsom, with Caitlyn Jenner already running against him.