My understanding is that it causes legal issues for the state when the budget surplus is too high (they legally have to spend more or reduce taxes). The current surplus is sort of a windfall due to people taking capital gains (which CA taxes as regular income), and Newsom doesn't think that's sustainable in the future.
That's why he was ok with giving one-off $1000 checks based on income (which is probably mostly redistributed cap gains revenue), while also veto'ing relatively cheap improvements to the education system due to their cost. I'd imagine that a $1000 check also goes over better with voters than kindergarten for everyone or improved mental health resources in schools.
In general lower income people spend a higher proportion of their money than people who are ineligible for the $1000 checks, so I can see how it might possibly still drive inflation.
And It would drive inflation in those products that lower-income people in particular purchase.
Actually, I don't think the effect will be big enough to notice, except that I bet there'll be loud and targeted offers for poor people with a lack of judgement: "$1,000 plus a trade-in will get you a new car!" "Click here to invest your $1,000 windfall in BitCoin!"
Not to belittle the windfall but a thousand bucks doesn't go very far these days, especially for families. Because of the timing of the payouts in Oct & Nov, it's probably just going to make a lot of the Thanksgiving and Christmas holidays better than they would have been. Get your Honey Baked Ham order in early, I guess?
69.5% of filers by count in the bottom groups, generate 10.5% of tax revenue, max refund, 79% of total refund.
4.5% of filers in the top groups, generate 55.2% of tax revenue, zero refund.
Middle two groups are 12.3% and 14.2% of payers, generate 8.8% and 25.5% of revenue, receive 10.6% and 10.3% of total refund.
These categories don't match exactly, but close enough.
That's why he was ok with giving one-off $1000 checks based on income (which is probably mostly redistributed cap gains revenue), while also veto'ing relatively cheap improvements to the education system due to their cost. I'd imagine that a $1000 check also goes over better with voters than kindergarten for everyone or improved mental health resources in schools.
In general lower income people spend a higher proportion of their money than people who are ineligible for the $1000 checks, so I can see how it might possibly still drive inflation.