Didn’t the state have a massive surplus last year?
Yes, and it was disbursed as stimulus under the guise of a "Gasoline Tax Refund." Obvious to everyone that it was a terrible fiscal decision, but clearly the administration thought it was prudent politically.
They didn’t have a choice - it was mandatory to return the surplus funds over a specific amount back to residents (SAL or Gann Limit)
Because of how California taxation works, there are good reasons to have a 5 year rolling tax window and set budgets based on that. That would give us a much clearer picture of real budget surpluses and deficits.
This is not obvious. Why is this a terrible decision?
Because it left the state in an untenable situation this year?
Since there is currently no output gap in the economy, any stimulus turns 1:1 into inflation. Government spending can still be beneficial if directed toward high-ROI investments, but a straight-up cash drop is just a waste.