Capitol Alert

No sales tax on diapers, new phone charges: How California’s new budget will affect you

California’s new $215 billion budget will cut costs for some Californians and raise taxes on others through a sweeping set of new policies ranging from ending sales taxes on diapers and tampons to fining people who don’t buy insurance.

Gov. Gavin Newsom signed the budget Thursday evening. The deal boosts spending on child care, health insurance subsidies and homelessness. It also relies on a big surplus to fill the state’s reserve accounts with more than $19 billion.

Here’s a look at how Newsom’s first budget, which takes effect July 1, will affect Californians.

Help affording health insurance, but fines if you don’t sign up

If you make less than 600 percent of the federal poverty level — about $150,600 for a family of four — you might get some help paying your health care costs under the new budget.

More than 900,000 Californians who buy their own health insurance will be eligible for new help paying their insurance premiums. It’s an effort to strengthen the Affordable Care Act, the federal law also known as Obamacare.

The subsidies will cap premiums to a percentage of income on a sliding scale for people between 200 and 600 percent of the federal poverty level.

At one end of that scale, an individual making $24,280 will see their premiums capped at about 6 percent of income, according to Health Access, a group that advocated for the subsidies. On the other end, people earning $72,840 would see their premiums capped at 18 percent.

To pay for those subsidies, the state will fine people who don’t buy insurance through a policy known as the individual mandate, which was first implemented as part of the Affordable Care Act.

Republicans have since ended the fines at the federal level. Newsom and legislative leaders say re-imposing the penalty at the state level will shore up the state’s health insurance marketplace and keep premiums from rising dramatically. It’s expected to bring in roughly $1 billion for premium assistance over three years.

In addition to revenue from the mandate, the premium subsidies will also be supplemented by an additional $450 million over three years.

Suspending sales taxes on diapers and tampons

The budget eliminates sales taxes on diapers and feminine hygiene products for two years.

That marks a victory for female lawmakers who had tried for years to end the taxes, which they say unfairly penalize women and young families. They had advocated for the ban to extend beyond two years, but were ultimately unable to persuade the governor.

In recent years, legislative committees have estimated ending sales taxes on diapers would cost the state about $35 million per year and ending taxes on feminine hygiene products would cost about $20 million.

New charges on your phone bill

Newsom also signed a budget trailer bill that will charge fees of up to 80 cents per month per phone line to upgrade the state’s 911 system.

The money will build a “Next Generation 911,” which will have more accurate call location data and texting capabilities.

More money to house the homeless

Sacramento and other large cities will get more money to help homeless people under a deal announced Thursday by Newsom and legislative leaders.

Under the agreement, $275 million will go to big cities including Sacramento that have more than 300,000 people. Counties will get $175 million and regional agencies called continuums of care will receive $190 million.

Sacramento Mayor Darrell Steinberg had been pushing for the $275 million for cities, which Newsom had called for in May. He said Sacramento will use its share of the money to build more shelters to get people off the streets.

The bill to allocate the homeless aid funding wasn’t finalized in time for Newsom to sign it Thursday, but he and legislative leaders announced it as part of the final budget deal.

More help for young and low-income families

The budget includes funding to increase the state’s paid family leave plan from six to eight weeks.

It’s intended to help new parents spend more time with their babies, and will also help families who are taking care of relatives.

The budget also increases funding for childcare and allocates $125 million for new preschool slots.

The budget also makes about 3 million California families eligible for the state’s earned income tax credit, which can give households up to $2,559 per year. It raises the income level to qualify for the credit to $30,000 and also creates an additional $1,000 credit for low-income families with children under 6.

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Sophia Bollag covers California politics and government. Before joining The Bee, she reported in Sacramento for the Associated Press and the Los Angeles Times. She grew up in California and is a graduate of Northwestern University.
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