California Governor Signs $308 Billion State Budget for 2022-23

On June 30, 2022, California Governor Gavin Newsom signed the $308 billion state budget for 2022-23 that includes another round of tax rebates, as well as significant spending for various programs. The key items included in the budget include the following:

Tax Impact

California Tax Rebate – Known as the Middle Class Tax Refund

This is a one-time payment to provide relief from rising inflation to eligible California residents who meet the following criteria:

  • 2020 tax return must have been filed by October 15, 2021 or if an ITIN was applied for and wasn’t received by October 15, 2021, the 2020 tax return must have been filed by February 15, 2022.
  • California adjusted gross income (AGI) is within the limits outlined in the grids below.
  • Not eligible to be claimed as a dependent in the 2020 tax year.
  • California resident on the date the payment is issued.

Amounts you can expect to receive are based on California AGI by taxpayer status:

Married Filing Jointly

CA AGI Reported on 2020 Tax ReturnPayment Amount with a DependentPayment Amount without a Dependent
$150,000 or less$1,050$ 700
$150,001 to $250,000$ 750$ 500
$250,001 to $500,000$ 600$ 400
$500,001 or moreNot qualifiedNot qualified

Head of Household or Qualifying Widow(er)

CA AGI Reported on 2020 Tax ReturnPayment Amount with a DependentPayment Amount without a Dependent
$150,000 or less$ 700$ 350
$150,001 to $250,000$ 500$ 250
$250,001 to $500,000$ 400$ 200
$500,001 or moreNot qualifiedNot qualified

Single or Married Filing Separately

CA AGI Reported on 2020 Tax ReturnPayment Amount with a DependentPayment Amount without a Dependent
$150,000 or less$ 700$ 350
$150,001 to $250,000$ 500$ 250
$250,001 to $500,000$ 400$ 200
$500,001 or moreNot qualifiedNot qualified

The payments are expected to be issued between October 2022 and January 2023. If the 2020 tax return was filed electronically and a tax refund was issued by direct deposit, then the payment will be made the same way. All others will be issued on debit cards.

12 Month Suspension on Sales Tax for Diesel Fuel

Relief is provided to commercial transportation by pausing the 3.9375% sales tax rate on diesel fuel. No other gas taxes are included in the suspension. 

New Foster Care Tax Credit

Former foster youths aged 18-25 will be eligible for a new tax credit of up to $1,000 per year.

Financial Aid

Emergency Rental Assistance

The budget provides additional funding to help qualified low-income tenants who requested assistance with rent prior to March 31, 2022.

Assistance to Pay Past Due Utility Bills

$1.4 billion will be allocated to helping California residents pay past due utility bills. Investments will also be made in clean reliable energy infrastructure to help protect California residents from rising utility bills related to extreme weather.

Food Assistance

The budget provides food assistance to immigrants aged 55 and older who are currently excluded from the CalFresh program.

Healthcare

Expanded Healthcare

California will provide universal access to affordable health coverage for lower-income individuals by providing coverage for Californians aged 26-49 regardless of immigration status. The Office of Health Care Affordability will be established to develop target costs for the health care industry and impose consequences for failing to meet them.

California to Produce Low Cost Insulin

California will start manufacturing its own insulin to lower costs and make it more affordable for everyone.

Invests in Reproductive Health Care and Abortion Access

The budget includes investing in improving the reproductive health care infrastructure, which adds the human papillomavirus vaccine as a covered benefit under the Family PACT program, effective July 1, 2022.

There will also be an increase to the flexibility of Medi-Cal providers to provide clinically appropriate medication abortion services and remove requirements for in-person follow up visits and ultrasounds if not clinically indicated. A one-time funding of $20 million will provide scholarships and loan repayments to a variety of health care provider types that commit to providing reproductive health care services.

The budget also includes subsidizing the cost of providing abortions to low-income or uninsured parents including those who come from out of state, with grants expected to be paid for those who need help paying for in-state lodging, child care and other expenses that may prevent low-income people from accessing abortion services.  For businesses willing to move out of other anti-abortion states and into California, the budget provides state business tax incentives.

Investing in Mental Health

Additional funding is provided for wellness support programs to include funding for youth suicide reporting and prevention. This will support the capacity of call centers to launch and operate the 9-8-8 National Suicide Prevention Lifeline, effective July 16, 2022.

Investing in Homeless Housing & Shelter

The budget invests $2.2 billion in expanding behavioral health housing, encampment clean-up grants and provides new bridge housing to support people living with untreated mental health and substance abuse disorders going through CARE Court.

Climate, Energy & Transportation

Wildfire Protection

$2.7 billion will be invested in wildfire protection, with projects that include:

  • Forest thinning
  • Prescribed burns
  • Grazing
  • Reforestation
  • Fuel breaks

Drought Response

$5.2 billion will be invested to help with drought response by building water resilience and promoting increased conservation.

Investments in Clean Energy and Transportation Infrastructure

The budget allocates $14.8 billion to support clean energy transportation and to improve transportation infrastructure. Investments include:

  • accelerating the transition to zero-emission vehicles
  • developing a high-speed rail system
  • expanding bicycle and pedestrian paths
  • supporting ocean ports

Public Safety & Education

Public Safety Plan

California will invest in various programs to help reduce crime including:

  • Launching a gun buyback program
  • Funding a Smash and Grab Enforcement Unit to fight retail theft
  • Investing $30 million to support the National Guard’s drug interdiction efforts and target transnational criminal organizations
  • Establishing a new fentanyl Enforcement Program

Education Transformation

California will invest in various programs to improve education including:

  • $7.9 billion to help provide learning recovery grants and investment in higher education.
  • $3.5 billion to schools to support art, music and other programs.
  • $4 billion to fund before school, after school and summer school programs.
  • $2 billion for affordable student housing.
  • $684 million to help reduce class sizes.
  • $2 billion to go towards teacher preparation and retention.
  • $25 million to go to the California College Promise Program, which is now expanded to cover college tuition for returning students. Previously only available to first time students.
  • Free school meals from kindergarten through 12th grade to all students regardless of income.

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