Analyst: $31B state budget surplus
SACRAMENTO (AP) — California is on track to have so much money that state officials will likely have to give even more of it back to taxpayers to meet constitutional limits on state spending, according to a new forecast from the state’s independent Legislative Analyst’s Office.
The state’s annual “Fiscal Outlook,” released, Wednesday, predicts a $31 billion surplus for the 2022 budget year that begins July 1. The analyst’s office says state is on pace to have so much money that it could exceed a constitutional limit on state spending by $26 billion over three years. That could require Gov. Gavin Newsom and state lawmakers to either cut taxes, spend more money on infrastructure or — perhaps the most popular choice in an election year — give rebates to taxpayers and spend more on public schools.
“We think it will ... turn out to be a pretty significant issue for the Legislature to consider in this coming budget process,” Legislative Analyst Gabe Petek said.
Newsom won’t reveal his budget proposal until January. But, on Wednesday, the governor indicated his favored giving some of the money back to taxpayers. That’s what he and the state Legislature did earlier this year, approving rebates totaling $12 billion for some taxpayers in a state budget that was also projected to exceed the spending limit.
“How we framed that historic surplus last year, similarly, we will frame our approach this year,” Newsom said during a news conference at the Port of Long Beach. “I’m very proud of the historic tax rebate last year, and I look forward to making the decision that I think is in the best interests of 40 million Californians.”
California’s tax collections have continued to soar despite the pandemic. From April through June of this year, California businesses reported a record high $216.8 billion in taxable sales — a 38.8% increase over the same period in 2020 and a 17.4% increase over those months in pre-pandemic 2019. Nick Maduros, director of the California Department of Tax and Fee Administration, said it is “a sign that business owners found creative ways to adapt during a difficult year.”
In September, collections from taxes on income, sales and corporations were 40% higher than September of last year and almost 60% higher than September 2019.