The outdated Gann Limit challenges the state’s ability to support public services

in total

It’s time to rethink rules that deny policymakers the tools they need to fulfill the promise of a California dream for all Californians.

By Scott Graves, specifically for CalMatters

Scott Graves is Research Director of the California Budget & Policy Center, an impartial, not-for-profit research and analysis organization.

California faces a frustrating paradox. The state budget is bulging, but a decades-old voting measure could soon limit the amount that can help millions of Californians who need help now.

Meanwhile, corporate and rich fortunes are rising, and most Californians believe the huge gap between rich and poor will widen in the years to come.

It’s time for world leaders to chart a path to overhauling the outdated spending cap that limits our ability to make the ongoing investments needed to help all Californians thrive and thrive.

Californians’ concerns about rising inequality are not surprising: millions continue to suffer the effects of a pandemic that has exacerbated long-standing health and economic inequalities, particularly for communities of color who are experiencing higher rates of illness, death and general hardship. To make matters worse, essential housing, sick leave and economic support for California families ended last fall.

Californians strongly support expanding safety net programs to improve economic security. And the continued growth in government revenue — as highlighted in Governor Gavin Newsom’s recent proposed state budget — means the money is there.

But there’s a catch: Policymakers’ hands are tied by an archaic rule that links government spending today to budget priorities of the 1970s — a disco-era spending limit known as the Gann limit.

California voters approved the Gann Limit in 1979 in one of the lowest turnout elections in the state’s modern history. The Gann limit applies to both government spending and local government spending. If the state exceeds its limit over a two-year period, the legislature must spend revenue in excess of that limit in specific ways — half to taxpayers and half to K-12 schools and community colleges.

The Gann limit challenges California’s ability to adequately support current services. The cost of many public services – from health care to support for the elderly and people with disabilities – can easily rise faster than the spending ceiling is allowed to rise each year. If we don’t allow rising revenues to cover the cost of basic services, policymakers could be forced to make significant cuts in spending outside of K-14 education, such as on health care, childcare, and housing benefits.

The spending cap also constrains leaders’ ability to push bold policy solutions. This includes affordable childcare for all working families and ongoing investments to address homelessness and the affordable housing crisis. Funding significant new investments to help all Californians thrive can best be accomplished by removing the straitjacket of an outdated spending limit.

Government policymakers have limited options to avoid reaching the Gann limit. For example, they can spend more on items that are exempt 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 during this year’s budget deliberations.

In contrast, the spending cap limits government spending on essential support services such as childcare, home care for the elderly, and housing support. The Gann Limit does not prioritize these types of human-centric investments, implicitly considering them excessive or unnecessary.

Since the spending cap is included in the California constitution, state leaders would have to ask voters to approve changes to it. Significant reform, or better yet, the lifting of the Gann limit, would allow the state to plan and make the bold investments needed to ensure all Californians share in the state’s wealth.

Californians want to address growing income and wealth inequality, and we have the resources to support those left behind before and during the pandemic. It’s time to rethink the rules of a previous generation of Californians — rules that deny policymakers the tools they need to fulfill the promise of a California dream for all Californians.

Comments are closed.