Healthy May Income Tax Showers Create Budgetary Flowers
All budget news isn’t grim – tax collections for May appear to be coming in nearly $400 million above estimates.
That helps provide the Legislature and GOP Gov. Arnold Schwarzenegger with more cash to close the state’s $19.1 billion cash shortfall and pushes off the date when the state’s stream of cash will begin to dry up, estimated now to be mid-to-late August by the Legislative Analyst if no budget is enacted before then.
Schwarzenegger’s Department of Finance estimates net income tax collections of $2 billion for May.
Through May 26, withholding – the tax payments employers take out of employee checks and send to the state – stands at $2.5 billion, according to the Employment Development Department.
The Franchise Tax Board reports receiving $462 million in additional income tax payments. Combining the two, May income tax receipts are nearly $3 billion.
However, there are also requests for nearly $700 million in refunds.
Nonetheless the net – total receipts less refunds — is still $2.3 billion, almost $300 million above the Schwarzenegger administration’s estimate with five days left in the month.
Bank and corporation tax collections for May were predicted to be $224 million. The Franchise Tax Board reports gross receipts of $345 million and refund requests of $39 million for a net of $306 million — $82 million above estimates.
June, however, is a significantly more important month. The GOP governor expects more than $5.5 billion in income tax receipts and $2.1 billion in bank and corporation tax payments.
Previously, June represented 10 percent of the income tax payments for the state’s fiscal year.
But in an effort to pull more future income into the current and previous fiscal year, the 2009 budget front-loaded estimated tax payments so that 40 percent, rather than 25 percent, are due in June.
Filed under: Budget and Economy
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