And “historic” is the right word for California’s staggering tax windfall. Governor Gavin Newsom recently announced he expects the state to be sitting on a budget surplus of nearly $100 billion this year. That spare mountain of money equals the entire budget from the year 2000. It’s a barely fathomable number unique in California or any other state’s experience.
What is to become of this colossal cash pile?
The money should, by law, go back to taxpayers. The “Gann Limit,” passed overwhelmingly by California voters in 1979, put an appropriations cap in place for our state that forbids government spending from increasing beyond certain growth factor calculations. The formulas are not well understood by most taxpayers but the concept behind the law is simple: Government spending can’t grow unchecked.
The spending cap dictates that revenues above the Gann Limit should be spent in certain, specific ways, including those rebates to taxpayers. In 1987, Governor Deukmejian refunded more than $1.1 billion to happy citizens because of this rule.
Not to belabor the point, but in today’s California, couldn’t taxpayers use a little break, especially since it’s mandated by law? Would a tax rebate help pay for six-dollar-a-gallon gas? What about electricity that’s 80-percent more expensive than the national average? Could families use a hand buying groceries in the worst inflationary period in decades, or maybe some help buying an $849,000 median priced home?
California families are suffering an affordability crisis, but government is flush with cash.
Although that may sound like a good arrangement to Sacramento, where they believe they know best how to spend other people’s money, it’s a disaster for people trying to get by in our state.
Sacramento should live up to the Gann Limit and issue the largest legal rebates to all taxpayers. Then the legislature and Governor should enact meaningful, permanent tax reductions so these surpluses – which come directly out of family budgets – disappear.
Will this happen? Deukmejian proved it’s possible to follow the law, but recent history doesn’t bode well. In last year’s budget, the Legislature misclassified billions in spending, moving it out of Gann Limit calculations and robbing taxpayers of refunds. This budget trickery was simply illegal and wrong, and it set an ugly precedent I hope is not followed this year.
But big-spending politicians and their Progressive allies are aiming their sights at the Gann Limit, wanting not just to ignore it but repeal it altogether and go on a spending spree unmatched in the annals of state government.
California spends too much even with the appropriations limit. Giving free rein to the legislature and a Governor such as Newsom would be disastrous to our fiscal health. It would lock in unsustainable spending and guarantee a budget crisis at the next economic slowdown.
From crime to homelessness to wildfires to gas prices and housing costs, California government has failed the people in too many ways, all while growing larger and larger and getting more and more expensive. That’s not much of a bargain hard working families propping it up with their tax dollars.
Like Prop. 13, the Gann Limit protects taxpayers. That’s too rare in our state. This year, the legislature and Governor have a $100-billion chance to honor the will of the voters and do right by struggling citizens. Let’s hope they take it.
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