Dramatic Uptick Needed for Tax Collections To Hit Estimates
Income tax collections improved Monday April 26 over Friday April 23rd’s totals, reaching nearly $540 million, the Franchise Tax Board reported.
But that may not be good enough for the state to reach its April revenue targets.
Half of the money in California’s cash-starved general fund comes from income taxes, 17 percent of that total is received in April.
If actual collections fail to meet revenue estimates, the state’s budget hole deepens. If collections exceed estimates, the hole shrinks.
With just four days left in the month, income tax collections total $5 billion. However, there are also $1.6 billion in requests fro refunds, lowering the net haul to just over $3.3 billion.
In his January budget for the fiscal year starting July 1, Gov. Arnold Schwarzenegger predicted income tax receipts of $10.5 billion for April.
Schwarzenegger’s total includes quarterly withholding payments made for the 2010 tax year. Those are sent to the Employment Development Department and total nearly $2.7 billion, month-to-date.
Adding the monthly withholding total to the tax board’s net income tax collections of $3.3 billion, still leaves the state $4.5 billion shy of $10.5 billion.
The GOP governor also estimated that bank and corporations taxes would total $1.9 billion by April 30. On April 26, $47 million was recorded, bringing the month-to-date collections to $1.3 billion.
In part because the budget signed in February contained almost $19 billion in tax increases over two years, state revenues — including sales tax — are $2.6 billion above budget estimates through March.
Under the formulas contained in Proposition 98, the 1988 initiative that dictates the state’s contribution to public schools, more than half of that revenue will be sent to schools, leaving $1.2 billion that can be used to help close the state’s current $20 billion budget gap.
Unless April collections rise sharply over the next four days that $1.2 billion benefit could be erased.
Filed under: Budget and Economy
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