Now that Gov. Gavin Newsom has issued his proposed budget, the legislature’s budget committees are considering what to do with it.

First up was the Senate Budget and Fiscal Review Committee, which recently listened to presentations from the Department of Finance about the governor’s priorities, and then heard from nonpartisan Legislative Analyst Gabriel Petek about the wisdom, or lack thereof, of plans for spending the state’s record budget surplus.

Petek advised caution. Citing “the magnitude of last year’s commitments,” he suggested that the legislature spend some time during the budget process on “checking in, essentially, on how that is going.”

Petek recommended that lawmakers review “how the implementation of those choices” is working out and how the rollout of the funding is going. “We would recommend that the legislature continue to be cautious about creating new or significantly expanded…programs, just bearing in mind the state’s overall capacity to implement these new initiatives.”

Perhaps he’s thinking of the $20 billion the state paid out for fraudulent unemployment claims, and the $3 billion that Newsom has proposed spending to pay down the state’s roughly $20 billion in unemployment insurance fund debt.

Petek reminded lawmakers that the surplus has resurrected a rarely relevant provision of the state constitution known as the state appropriation limit, also called the Gann limit after Paul Gann, the taxpayer activist who helped to pass it in 1979. Petek told lawmakers that Newsom’s budget anticipates the need for $2.6 billion in “changes” because of the spending limit, but the governor would delay any plan for those changes until May.

Petek said it would be better if the legislature started thinking about a plan before May, in order to have greater flexibility. For instance, he explained, if revenue continues to pour in ahead of expectations, the legislature might want to move quickly to reduce taxes.

Don’t hold your breath. According to data from the Franchise Tax Board, about two-thirds of the state’s revenue comes from the personal income tax, and about two-thirds of the personal income tax revenue comes from just 5% of the state’s income-earning residents. A reduction in taxes likely would be viewed as “tax breaks for the rich” by most state lawmakers, who regularly consider proposals to raise taxes on high-income residents even further.

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But that’s counterproductive. The 5% of state residents paying high income taxes includes individuals who run small businesses that are responsible for much of the hiring that keeps other Californians employed and paying taxes themselves. The constant threat of higher taxes, on top of the highest state income tax rates in the country, has—at best—a chilling effect on business growth. At worst, it causes businesses to leave the state or never come here in the first place. Gradually, Californians find it harder and harder to get a job that pays enough to cover the cost of living.

That erodes the middle class and increases the number of people who need government assistance to survive. The growing need for more programs to help more people in poverty is a symptom of a failing government.

The governor has proposed a handful of business tax credits, but the legislature can do more. The Gann limit provides political cover for progressive lawmakers to cut tax rates and help job-creating businesses and their employees. Petek is right. The legislature should start to plan for it.