How CA's 2022 $31 billion budget surplus could mean tax cuts and tax rebates for you

BAKERSFIELD, Calif. (KBAK/KBFX) — For the 2022 fiscal year budget, which starts on July 1st, Californian's independent legislative analyst's office predicts California will have a $31 billion budget surplus,$14 billion above the state constitutional limit.

Governor Newsom and lawmakers can either decide to cut taxes, give rebates to taxpayers, spend money on schools or on infrastructure.

H.D. Palmer, Deputy Director for the State Department of Finance says the Governor could very well likely decide to do a little bit of each.

"We are worlds away from where we were and where we thought we would be about 18 months ago, right at the time that the COVID-19 pandemic really took root and the recession that is brought about with it," Palmer, said.

Governor Newsom has until January 10th to release his budget but said Wednesday he will likely use a similar approach to last year's surplus when taxpayers where given rebates.

How did California get to this point? Palmer says it's from restaurants and stores doing better with sales tax from consumers than the state projected, due to the pandemic because of the stock market.

"Things such as capital gains and stock options are taxed as personal income tax in California," Palmer, said.

34th District Assembly Member, Vince Fong, says the surplus is a function of the fact Californians are overtaxed.

"We have overtaxed Californians and we need to return that money back to those who earned it," Assembly Member Fong said. "So, we do need to do permanent tax relief."

He says fixing the water supply amid the ongoing drought is a problem that would fit under the infrastructure scope, that needs to be addressed.

"We have long term investments that we haven't made, the fact that we had a surplus last year and as we debated the budget, not one dollar went to water storage, in the midst of one of the worst droughts in our state's history is a travesty," Assembly Member Fong, said.

Both Palmer and Fong say the state needs to build its state emergency reserve fund, which currently stands at around 24 million dollars.