A California budget surplus that is already expected to be massive could end up being billions of dollars more than initial estimates.
When Gov. Gavin Newsom unveiled his 2022-2023 budget proposal back in January, his administration forecast a $45.7 billion surplus.
But in a February update, the state Legislative Analyst’s Office said there’s a very good chance the surplus could exceed the initial estimate by $6 billion to $23 billion, thanks to money collected from personal income, sales and corporation taxes.
In the update released last week, analysts wrote, “Although we are halfway through the fiscal year, much uncertainty remains, as the most important collection month (April) is still ahead of us.”
The office’s “best guess” of the actual amount is around $15 billion.
The report also noted that state lawmakers will likely have to reckon with the state appropriations limit, also known as the Gann Limit. That restricts the amount of tax revenue California can spend and could trigger another round of stimulus checks, as was the case when that very scenario played out last year.
“It’s hard to tell what the future holds with respect to the pandemic, with respect to the economy and it’s early in the budget process,” said Assembly Speaker Anthony Rendon, D-Lakewood.
Gov. Newsom previously signaled the likelihood of another round of rebates for taxpayers, but hasn’t provided details on potential amounts and eligibility. Last year, there were two rounds of direct payments, dubbed Golden State Stimulus I and Golden State Stimulus II.
Newsom’s proposed budget didn’t contain tax rebates, but he has indicated the final revision “likely” will include the checks.
“We expect in the May revise language when I update the budget that we are likely to have an additional rebate to the taxpayers,” he said last month.
Legislative leaders in the state Assembly and Senate weighed in on the matter last week, noting the potential for the second consecutive year of tax rebates should California’s budget surplus again hit its constitutional limit. However, they emphasize, it’s too soon to say whether that’s a possibility,
“We are going to look at this in the lens through equity for the hardest working Californians who have not rebounded, who are continuing to suffer. So stimulus is part of that, but it will be through that lens and trying to make sure that we’re able to cover those bases thoughtfully and to make a difference in real people’s lives,” said California Senate President pro Tempore Toni Atkins, D-San Diego.
Lawmakers noted that stimulus can be a driver of inflation, something the nation is currently grappling with how to control. But while acknowledging the issue, leaders expressed more concern about Californians being able to pay for necessities like rent, food and transportation.
“I’m certainly concerned about inflation, but at the same time I know there are bread and butter everyday issues Californians are … suffering from on a daily basis,” Rendon said.
