The First Week of April Tax Receipts
A lot can change between now and the end of April, the largest revenue collection month for the state. But a look at the first eight days of the month isn’t exactly banner news for the state’s fiscal health.
In 2008, not exactly a boom year either, $703,166 in personal income taxes was paid in the first eight days of the month.
During the first eight days of April 2009, $456,227 came over the transom.
By April 30 2008, nearly $12.9 billion in personal income tax revenue was collected.
This year, Governor’s Schwarzenegger’s Department of Finance predicts a monthly total of only $8.9 billion in personal income tax receipts.
If the first week is any indicator, revenues may not even meet that lowered expectation.
While a 1 percent sales tax increase approved as part of the budget signed by the GOP governor February 20 took effect at the beginning of the month, it’s unclear how much of the income tax revenue slowdown it will counter.
April can be a volatile month and the two weeks after the April 15 tax-filing deadline are far determinative of the state’s fiscal success than the first eight days.
But a number of economic indicators, such as unemployment, have worsened since the budget passed last September and worsened more since the one signed into law in February.
Looking at the fiscal landscape, only the most optimistic observers would say the state general fund’s health has improved – or stayed the same — over the last six weeks.
The budget signed in February was designed to close an estimated $42 billion gap between spending commitments and revenues. Taxes were increased by $12.5 billion. State spending was reduced by more than $14 billion.
Despite that, the Legislative Analyst predicts there will be a gap of $8 billion between money coming in and money going out by June 30, 2010 unless the governor and lawmakers do something to correct the problem.
The April tax receipts – and those of March, a big collection month for businesses who pay quarterly taxes – suggest the $8 billion problem will grow and, depending on various factors, possibly double.
Personal income tax collections in February were $437 million lower than the Department of Finance’s estimates. However, collections were still $134 million higher year-to-date than expected. Figures for March have yet to be released.
Bank and corporation taxes collected so far in April are roughly the same as those posted last year at this time — $133 million.
The Department of Finance expects to reap $2.29 billion in business taxes this April. The rosy figure – only $1.8 billion was collected in April of 2008 and April of 2007 – is due to predictions of higher receipts from new tax acceleration requirements in the September budget such as LLCs paying their fees earlier.
Adding to the fiscal hole, polling indicates voters are not clamoring to approve several measures on the May 19 special election ballot that help “balance” the budget. If voters balk, the budget jumps $5.8 billion further into the red.
The math: $8 billion plus $5.8 billion plus a few billion less than expected in tax receipts. Thinks $16 billion – or worse.
Filed under: Budget and Economy
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