It’s time to reconsider the rules that rob policymakers of the tools they need to deliver on the promise of a Californian dream for all Californians.
By Scott Graves, special for CalMatters
Scott Graves is the research director of the California Budget & Policy Center, a nonprofit, nonpartisan research and analysis organization.
California faces a frustrating paradox. The state budget is teeming with money, but a decades-old election measure could soon limit the amount that can be used to support millions of Californians who need help now.
Meanwhile, fortunes are rising for corporations and the wealthy, and most Californians believe the huge gap between rich and poor will widen in years to come.
It’s time for state leaders to lead the way in overhauling the outdated spending cap that limits our ability to make the ongoing investments needed to help all Californians be healthy and prosper.
Californians’ concern about rising inequality is unsurprising: Millions continue to experience the effects of a pandemic that has exacerbated longstanding health and economic inequities, particularly for communities of color, who experience higher rates of illness, death and general hardship. To make matters worse, key housing, sick leave and economic supports ended for California families last fall.
Californians strongly support the expansion of safety net programs to improve economic security. And the continued growth of state revenues — as Governor Gavin Newsom’s proposed state budget recently underscored — means the money is there to do it.
But there’s a catch: Policymakers’ hands are tied by an archaic rule that ties today’s public spending to 1970s budget priorities – a disco-era spending cap known as the limit. of Gann.
California voters approved Gann’s boundary in 1979, in one of the weakest elections in modern state history. The Gann limit applies to state spending as well as local government spending. If the state exceeds its limit over a two-year period, the legislature must spend the revenue exceeding that limit in specific ways — providing half to taxpayers and the other half to K-12 schools and community colleges.
Gann’s limit calls into question California’s ability to adequately support current services. The cost of many public services – from health care to support for the elderly and disabled – can easily rise faster than the spending cap can rise each year. If we don’t allow income growth to cover the cost of basic services, policymakers may be forced to drastically cut spending outside of K-14 education, such as health care, child care, and more. children and housing assistance.
The spending cap also limits the ability of state leaders to come up with bold policy solutions. These include affordable child care for all working families and continued investments to address the homelessness and affordable housing crisis. The best way to fund significant new investment to help all Californians prosper is to remove the shackles of an outdated spending limit.
State policymakers have limited options to avoid reaching the Gann limit. For example, they can spend more on items excluded from the limit, such as infrastructure projects. This is one of the main reasons why major infrastructure proposals have been prioritized by heads of state in this year’s budget deliberations.
In contrast, the spending cap limits state spending on essential supports like child care, home care for the elderly and housing cost assistance. The Gann limit does not prioritize these types of people-oriented investments, implicitly viewing them as excessive or unnecessary.
Since the spending cap is enshrined in the California Constitution, state leaders would have to ask voters to approve any changes. Substantial reform or – better yet – repeal of the Gann limit would allow the state to plan and make the bold investments needed to ensure that all Californians share in the state’s wealth.
Californians want to fight growing income and wealth inequality, and we have the resources to support those who have been left behind, before and during the pandemic. It’s time to reconsider the rules set by a previous generation of Californians — rules that rob policymakers of the tools needed to deliver on the promise of a Californian dream for all Californians.