BAKERSFIELD, Calif. (KGET) — California will likely have a $31 billion budget surplus next fiscal year, according to the state’s independent Legislative Analyst’s Office. And because of a 1979 law called the Gann limit, that could mean tax cuts or rebates for residents.
The Gann law requires the government to return money to taxpayers once state spending reaches a certain level. At that point, state lawmakers have three options for what to do with the money: cut taxes, give rebates to taxpayers or invest in infrastructure projects.
Assemblymember Vince Fong (R – Bakersfield) said he has ideas on what to do with the money. “Improving necessary road projects not only through the Central Valley, I would say the 99 and the 5 are key areas that we need to expand and improve,” he said.
Fong also said he supports long-term and permanent reductions in tax rates. But overall, he says it’s not a good sign there is a surplus in the first place.
“The fiscal outlook for our state is not a reflection of our economic outlook,” he said. “The fact that there is revenue in the state of California is not a reflection that the economy of California is healthy, it just means that Sacramento has collected a lot of taxes.”
On the other side of the aisle, local Democratic political analyst Neel Sannappa said the state’s extra cash actually shows the strength of California’s economy.
“This just shows that regardless of the pandemic or whatever it might be, businesses and folks in California are still producing,” he said. “It’s no secret that our GDP is one of the strongest in the world.”