Much Better Fiscal Situation Than It Would Appear From a Quick Glance at the Press Release — See Editor’s Note
SACRAMENTO – State Controller John Chiang today released his monthly report covering California’s cash balance, receipts and disbursements in March. Total receipts for the month were $370 million lower — a 5.8 percent drop — than estimates found in the governor’s proposed 2011-12 State Budget.
“The State’s cash position actually worsened by $370 million in March, despite very strong income tax collections,” said Chiang. “California’s economic recovery is clearly underway but is threatened by a budget gridlock that could halt job-producing public works projects, further erode the State’s credit ratings, and delay billions of dollars in payments.”
Sales taxes were up $9.7 million (0.5 percent) in March, and personal income taxes came in $1.2 billion above (144.7 percent) estimates. The drop in revenues was caused by corporate taxes, which were down $387.6 million (-19.7 percent), and the cancelled sale and lease-back of State properties that was slated to generate $1.2 billion in March.
The State faced a $19 billion cash deficit on March 31. That deficit was covered by $9 billion of internal borrowing – short term loans from special funds – and $10 billion of external borrowing.
March 2011’s financial statement and the summary analysis can found on the Controller’s Web site at www.sco.ca.gov. The site also includes an April Tax Tracker, which lists the daily amount of personal income tax collected. The Governor’s proposed 2011-12 State Budget expects more than $6.8 billion of income tax collections in the month of April alone.
(Editor’s Note: Chiang references the key to the drop in revenue in the press release but this slightly edited first paragraph of the Summary Analysis that can be linked to above lays it out in more detail:
“Compared to the 2011-12 Governor’s Budget, total general fund revenues were down in March 5.8 percent, a $370 million drop. However, personal income tax revenues came in at 144.7 percent above estimates, a $1.2 billion increase. Retail sales and use taxes were also above expectations by $9.7 million. Corporate tax revenues were $387.6 million worse than anticipated — off 19.7 percent– but most of the month’s drop was due to the cancelled sale and lease-back of state buildings that was slated to happen in March. Those revenues were scored under the “Not Otherwise Classified” category, which dropped $1.2 billion — 95.3 percent — below budget estimates.”
Emphasis added. To restate it, the net $370 million hit in March is the result of a one-time issue — scoring the $1.2 billion loss of Gov. jerry brown choosing not to sell 11 state office buildings, a move approved by former Gov. Arnold Schwarzenegger and the Legislature. A sign of recovery is that income taxes came in $1.2 billion above projections. On Page 2 of the Summary Analysis, Chiang says that even with the dip in March, tax collections rom July 1 2010 through March 31 are running almost $950 million above budget estimates.)
Filed under: Budget and Economy
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