May Tax Receipts Could Lessen Budget Hole By $500 Million
Although a final tally on refund requests won’t be known until the May 31, it still appears, as of May 28, the state will take in more than it expected for the month.
Gov. Arnold Schwarzenegger’s Department of Finance estimates net income tax collections of $2 billion for May.
Through May 27, withholding – the tax payments employers take out of employee checks and send to the state – stands at $2.7 billion, according to the Employment Development Department.
The Franchise Tax Board reports receiving $477 million in additional income tax payments. Combining the two, May income tax receipts are nearly $3.2 billion.
Refund requests total $709 million but could climb because they are tallied last.
But, month-to-date, total receipts less refunds is just under $2.5 billion, giving the state $500 million in budgetary relief.
Bank and corporation tax collections for May were predicted to be $224 million. The Franchise Tax Board reports gross receipts of $340 million and refund requests of $40 million for a net of $310 million — $86 million above estimates.
Greater-than-anticipated revenue helps the budget process in two ways:
It lessens the $19.1 billion cash shortfall the state 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.
June is a much 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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