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Gann Limits, a form of appropriations limit, are caps on government budgets in California. These caps apply to the state government of California and to local governments like cities and school districts. Gann Limits forbid governments from spending more than a certain amount per year. They also forbid governments from bringing in more tax revenue than they would be allowed to spend. With some exceptions, a government that brings in too much tax revenue over a two-year period is required to cut taxes for future years. The limits are adjusted for inflation and population growth.[1][2][3]

Origin

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Gann Limits are named for Paul Gann, a conservative political activist.[4] Gann co-authored 1978 California Proposition 13, which amended the California Constitution to limit property taxes. After the success of Proposition 13, he led the campaign for the proposition that would restrict government spending even further: 1979 Proposition 4, which Gann promoted as "The Spirit of 13."[5]

Proposition 4 was approved by California voters, adding Gann Limits to the California Constitution in the form of Article XIII B.[6]

Impact

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After the passage of Proposition 4, bond agencies lowered California's bond rating. The state of California attributed this to the fiscal uncertainty created by Gann Limits and Proposition 13.[7]

Gann Limits have forced the State of California to rebate money to taxpayers rather than spending it on government programs three times: $1.1 billion in fiscal year 1987–1988,[8] $2.8 billion in fiscal year 2020-2021 (Golden State Stimulus 1),[9][10] and $6 billion in fiscal year 2021-2022 (Golden State Stimulus II).[11][12]

In 1988, after the first round of rebates, the California Teachers Association sought to protect school spending from potential cuts. They advocated for the successful Proposition 98, which now requires approximately 40% of the State of California's general fund to be spent on schools. This has ensured a source of school funding, and also further restricted California spending.[13][14] In 2017, a popular single-payer proposal in California was blocked in the state legislature in part due to budget concerns,[15][16] including concerns about the limitations imposed by the state Gann Limit and Proposition 98.[17] An analysis of the proposal prepared for the Senate Appropriations Committee found that complying with these constitutional budget limits would be infeasible.[18] A Select Committee on Health Care Delivery Systems and Universal Coverage affirmed this finding.[19]

Due to the fact that other spending mandates are not adjusted for Gann Limits, the California Legislative Analyst's Office has found that the State of California loses $1.60 for every $1.00 that it takes in above its limit. They indicate that this could cause a paradoxical fiscal cliff for the state, where bringing in too much revenue causes funding to be drastically restricted.[20]

Exceptions

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Gann Limits do not apply to revenue from fees or regulatory licenses. They also don't apply to appropriations for capital expenses (like construction of a building), debt service, costs mandated by a court order, or the expenses incurred by refunding taxes. Governments can temporarily increase their Gann Limits either through an emergency declaration or a vote of the people.[21]

See also

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References

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  1. ^ Sears, David O.; Citrin, Jack (1982). Tax revolt: something for nothing in California. Cambridge, Mass: Harvard University Press. pp. 34–35. ISBN 978-0-674-86835-9.
  2. ^ New, Michael J. (October 28, 2004). "The Gann Limit Turns 25". Investor's Business Daily.
  3. ^ Kousser, Thad; McCubbins, Mathew D.; Rozga, Kaj (2009). "When Does the Ballot Box Limit the Budget?". In Garrett, Elizabeth; Graddy, Elizabeth A.; Jackson, Howell E. (eds.). Fiscal Challenges: An Interdisciplinary Approach to Budget Policy. Cambridge University Press. ISBN 9780521140096.
  4. ^ "Decades later, California's 'Gann limit' back in spotlight". 10 May 2021. Archived from the original on 6 December 2022. Retrieved 22 October 2025.
  5. ^ "Nationwide Revolt on Taxes Showing No Sign of Abating (Published 1979)". The New York Times. 5 August 1979. Archived from the original on 22 October 2025. Retrieved 22 October 2025.
  6. ^ "California Proposition 4, Government Spending 'Gann Limit' Initiative (1979)". Ballotpedia. Archived from the original on 10 November 2022. Retrieved 22 October 2025.
  7. ^ Garrett, Elizabeth; Graddy, Elizabeth Anne; Jackson, Howell E., eds. (2008). Fiscal challenges: an interdisciplinary approach to budget policy. Cambridge: Cambridge University Press. p. 309. ISBN 978-0-521-14009-6.
  8. ^ "California Politics: Does the state's spending limit need a makeover?". Los Angeles Times. 2022-01-14. Archived from the original on 2022-01-14. Retrieved 2026-01-26.
  9. ^ Walters, Dan (2022-05-22). "How voters put limits on state budget spending". CalMatters. Archived from the original on 2023-04-02. Retrieved 2025-12-03. Last year saw billions of dollars in "Golden State Stimulus" payments to taxpayers to get around the Gann Limit
  10. ^ Browning, Corey (2022-01-24). "California legislators weigh in on how to spend Gann limit surplus". San Mateo Daily Journal. Archived from the original on 2022-01-24. Last year, Newsom avoided passing the limit by preemptively issuing $1,100 checks — "the Golden State Stimulus" — to two-thirds of the state's adult population after facing a $16 billion breach. Taxpayers in '87 were given $1.1 billion worth of rebates.
  11. ^ León, Gabriela (2025-02-20). "Here's the truth about the Golden State Stimulus check". www.msn.com. Archived from the original on 2025-12-03. Retrieved 2025-12-03.
  12. ^ Macht, Daniel (2022-01-12). "Final California Golden State Stimulus II checks are going out". KCRA. Archived from the original on 2024-10-06. Retrieved 2025-12-03.
  13. ^ Walters, Dan (2022-05-22). "How voters put limits on state budget spending". CalMatters. Archived from the original on 2023-04-02. Retrieved 2025-12-03.
  14. ^ Mathews, Joe; Paul, Mark (2010). California Crackup: How Reform Broke the Golden State and how We Can Fix it. University of California Press. p. 66. ISBN 978-0-520-26852-4.
  15. ^ Marzorati, Guy (2017-06-27). "California Dems Trade Barbs Over Stalled Single-Payer Bill | KQED". www.kqed.org. Retrieved 2026-01-26.
  16. ^ Mason, Melanie. "California Assembly leader Anthony Rendon's decision to shelve single-payer healthcare angers progressive activists". Los Angeles Times. Archived from the original on 2017-06-27. Retrieved 2026-01-26.
  17. ^ Dayen, David (2017-06-30). "California Single-Payer Organizers Are Deceiving Their Supporters. It's Time to Stop". The Intercept. Retrieved 2025-12-03.
  18. ^ "Can California Implement a Single-Payer Health Care System Without Going to the Ballot?". California Budget & Policy Center. Retrieved 2026-01-26.
  19. ^ Bindman, Andrew B.; Mulkey, Marian R.; Kronick, Richard (September 2018). "Beyond The ACA: Paths To Universal Coverage In California". Health Affairs. 37 (9): 1367–1374. doi:10.1377/hlthaff.2018.0504. ISSN 0278-2715. PMID 30179543.
  20. ^ "Despite surplus, analyst warns of California 'fiscal cliff'". AP NEWS. 2022-05-16. Archived from the original on 2022-07-07. Retrieved 2025-12-03.
  21. ^ Harris, Tanya. "Gann Limit" (PDF). mccmeetingspublic.blob.core.usgovcloudapi.net. Archived from the original (PDF) on 2025-12-03. Retrieved 2025-12-03.
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Article XIII B of the California Constitution

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