State’s June Revenue Collections Are On Track at Mid-Month
June 15th is the constitutional deadline for lawmakers to submit a budget to the governor. The deadline will be missed, as it usually is.
Lawmakers meeting in a special two-house conference committee to reconcile the differences between the Senate and Assembly’s spending plans appeared nowhere near a deal June 15 on closing a $17.9 billion gap between revenues and spending commitments.
Gov. Arnold Schwarzenegger also insists that whatever spending plan the Legislature sends him contain a $1.2 billion reserve – widening the budget gap. He also demands lawmakers include budget and pension “reform” in their package.
Another reason for the delay, however, is that because of changes in last year’s budget, June has become the top revenue collection month for the current fiscal year, which ends June 30.
If collections come in above estimates, it would reduce the budget hole to be filled. Below estimates, the hole deepens.
Traditionally, April with its income tax deadline has been the state’s biggest revenue collection month.
About 50 percent of the state’s cash-starved general fund comes from income taxes, 17 percent of which are collected in April. June, historically, has brought in 10 percent of that total.
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.
Now 70 percent of estimated payments are made before the end of the fiscal year – the 40 percent in June and 30 percent in April. The remainder is paid in December.
The GOP governor expects more than $5.5 billion in income tax receipts and $2.1 billion in bank and corporation tax payments in June.
Last June, the totals were almost reversed: $2.4 billion in income tax and $4.5 billion in bank and corporate taxes.
“June has historically been a big month for cash but because of the changed payment schedule, it’s going to be even more important,” said H.D. Palmer, spokesman for Schwarzenegger’s Department of Finance.
May’s revenue, including the sales tax, was nearly $600 million above the GOP governor’s estimates due mainly to $392 million more than expected in income tax receipts, according to the State Controller.
However, April collections were $3.6 billion lower than Schwarzenegger estimated in his January budget.
State expenditures were running $1.15 billion behind estimates through May 31.
Daily tax receipts will increase in size after the 15th, as the Franchise Tax Board counts the payments made by the deadline for what were formerly quarterly payments.
They are already ramping up. Of the $1.1 billion the tax board reports receiving through mid-month, $723 million was received June 14 and June 15.
The tax board also shows $516 million in bank and corporations tax payments through June 15.
The state Employment Development Department, which is sent the income taxes withheld from employee paychecks, reports $1.6 billion collected as of June 15. Schwarzenegger pegs total withholding collections for the month at $2.8 billion.
Adding the withholding and estimated income tax payments totals $2.7 billion.
“Halfway through the month and we’re halfway home,” said Palmer of the state reaching its $5.5 billion in projected income tax receipts.
Schwarzenegger also projects an additional $3 billion in June in sales tax receipts.
Filed under: Budget and Economy
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