It’s Official: April Tax Collections $1.8 Billion Short

April revenue collections fell $1.8 billion below estimates, worsening the state’s budget cash shortfall by a like amount.

As of April 30, the state received $7,752,965 in personal income taxes – well short of the $8.9 billion expectation used to create the budget signed in February.

Corporate tax collections were expected to be $2.3 billion for the month. They totaled $1,647,727.

The less-than-anticipated revenue collections are the latest testament to the state’s listless economy, which has been pummeled by the collapse of the construction industry, tight credit and drought.

Fewer dollars coming in deepens the state’s budget hole, which is already gaping.            

Two weeks after the February budget was signed, the Legislative Analyst said the spending plan for the fiscal year that begins July 1 was already out of balance by at least $8 billion.

The analyst assumed at the time that liquidating a $2 billion reserve for emergencies built into the budget would reduce the cash shortfall to a net of $6 billion.

April’s lower-than-expected collections will substantially shrink the size of that reserve, pushing the net shortfall up to at least $7.8 billion.

The hole in next year’s budget would immediately grow by another $5.8 billion if voters reject three budget-balancing measures on the May 19 special election ballot. A recent Field Poll and internal tracking by campaigns in support of the measures show voters rejecting them.

Voting down Propositions 1C, 1D and 1E also causes the budget’s $12.2 billion in temporary tax increases, including a 1 cent rise in the sales tax which took effect April 1, to end sooner.

 That, in turn, will further widen the gap between spending commitments and revenue in subsequent fiscal years saddling the state — and its next governor — with ongoing double-digit billion dollar cash shortfalls.



Filed under: Budget and Economy


  1. We need higher taxes in California. After all, the state knows better how to spend the money in my wallet than I do.

    Seriously, they need to cut spending. Taxes aren’t the way to fix these budget problems.

    Comment by Barry O — 5.01.2009 @ 11:18 pm

  2. It is not that the state would spend the money better, it is that everyone wants the state to provide services such as health care, police, licensing, welfare, social service, etc. but no one wants to pay for it. The state needs to align its expenses with the revenues.

    Comment by Larry H. — 5.07.2009 @ 5:54 pm

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