California expects a record $97.5 billion surplus, Gov. Gavin Newsom says. He proposes widespread cash rebates, bonuses for health care workers and free transit. “No other state in American history has ever experienced a surplus as large as this,” he says.

Governor's proposals include rebates for nearly all Californians to offset the effects of inflation. State budget planners have been “deeply mindful’ of the potential for an economic downturn. California also had a substantial surplus last year as the governor fended off a Republican-led recall.

The S&P 500, the benchmark U.S. stock index, has been nearing a drop of 20 percent since January. California’s progressive tax system is famously volatile because of its reliance on the taxation of capital gains on investment income. “What more caution do we need in terms of evidence than the last two weeks?” the governor asked.

A little more than half of the surplus would go to an assortment of budgetary reserves and debt repayments. Almost all of the additional spending devoted to one-time outlays under the governor’s plan. Some lawmakers are pushing for income-based cash rebates, while the governor is proposing to tie relief to vehicle ownership.
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