Besides the surplus, California Gov. Gavin Newsom touted $26 billion in direct state aid from the federal stimulus plan that Democrats passed in March. | Jeff Chiu/AP Photo

By Jeremy B. White
05/10/2021 08:24 PM EDT

The governor embarked on a road show to trumpet the fruits of an astonishing $75.7 billion state surplus thanks to soaring capital gains during the pandemic.

OAKLAND — Nothing smooths out political turbulence like having money to spend.

California Gov. Gavin Newsom embarked on a cross-state road show Monday to trumpet the fruits of an astonishing $75.7 billion state surplus thanks to soaring capital gains during the pandemic. His first order of business: tell Californians he wants to give them cash and pay some of their utility bills and back rent.

The stimulus play demonstrates how an unexpected windfall offers the Democratic governor a powerful tool to ward off a recall threat. Checks would arrive in voters’ mailboxes not long before ballots do this fall.

“It’s very significant, and it dovetails into the general perception that we are coming out of the pandemic, the worst is behind us, the future looks brighter as evidenced by the checks the public will soon receive,” former Gov. Gray Davis, who was recalled in 2003, said in an interview Monday. “It all flows into the same narrative that the problems are mostly behind us today and will be substantially behind us come this fall.”

California’s record windfall is a product of its prosperous tech sector, high share of professional workers and steeply progressive tax structure. While unemployment remains higher in California than in most states because of job losses in its travel and service sectors, upper-income earners had a boom year as they adapted to remote work and enjoyed another surge in the stock market.

The windfall is so great that it is likely to trigger a 1979 vestige of California’s anti-tax movement that hasn’t been invoked for more than three decades. Under a constitutional spending cap known as the “Gann Limit” after fiscal conservative Paul Gann, the state must refund taxes and direct more money to schools once revenues top a certain level.

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