State Short of Cash Collection Estimates by Nearly $539 Million, Controller Says

The state’s July revenues were down $538.8 million — 10.3 percent — below projections from the recently passed state budget, according to a report on the previous month’s cash balance issued August 9 by State Controller John Chiang.

“While July’s revenues performed remarkably similar to last year’s, they still did not meet the budget’s projections,” said Chiang in a press release. “While we hope for better news in the months ahead, every drop in revenues puts us closer to the drastic trigger cuts that could be imposed next year.”

Part of the final budget deal was a mechanism imposing nearly $2.5 billion in cuts in January if the state falls more than $2 billion short of the revenue estimates used in the spending blueprint signed by Gov. Jerry Brown June 30.

As has been the case with most spending reductions in the budget approved over the past five years, public schools take the brunt of the reductions — nearly $1.9 billion.

Chiang’s report shows income taxes above projections by $89 million in July. Sales taxes were down $139.4 million and corporate taxes were down $69.5 million, more than 19 percent below estimates.

Most of the nearly $539 million loss came from lower-than-expected collections from some of the state’s other revenue sources.

Those include alcohol and cigarette taxes and vehicle license fees, which feel from 1.15 percent of a car or truck’s value to .65 percent on July 1.

The budget predicted collections from those other revenue sources of $707 million. Instead, it was $288 million.

Chiang also reported that the State faced an $11.1 billion cash deficit on July 31. That deficit was covered by internal borrowing or short-term loans from special funds, along with external borrowing – as such deficits customarily are during the first half of the fiscal year when the state takes in less cash than the final six months.



Filed under: Budget and Economy

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