Tax Collections Falling Off, Bigger Budget Hole More Likely
With five more days left in the month, state income tax collections are dropping off, increasing the odds the state’s budget hole will grow.
As of April 25, the Franchise Tax Board has received just under $6.5 billion in payments this month — $1.9 billion less than Gov. Jerry Brown’s budget predicts the agency will receive through April 30.
“The revenue numbers are concerning,” Senate President Pro Tempore Darrell Steinberg, a Sacramento Democrat, told reporters at an April 25 media availability. “We know that we’re going to have to make some more tough decisions. We’ll do what we have to do.”
The Democratic governor has already acknowledged he and lawmakers must fill a budget hole that’s at least $800 million larger than he estimated in January – about $10 billion.
Brown hopes April’s tax receipts at least meet expectations. If not, the budget hole deepens. If expectations are exceeded, the hole shrinks.
Although the month isn’t over, evidence suggests the former.
On the two days following April 17 – this year’s tax due date – the state reported nearly $2.7 billion in tax receipts.
Since then, including April 25’s On April 20 and April 21 the state collected just over $500,000 million each day.
On April 24, the total was $239 million. And on April 25 — $186 million.
April is by far the largest month of the year for income tax receipts.
The Democratic governor expects a net total of $9.4 billion in both payments to the tax board and withholding from employee paychecks, which is sent by businesses to the Employment Development Department.
In addition to what the tax board receives, Brown predicts the employment department to pocket a little over $3.2 billion.
That $3.2 billion plus the board’s $8.4 billion adds up to gross receipts of approximately $11.6 billion.
Brown’s budget writers also expected there to be requests for refunds of almost $2.1 billion.
While revenues are falling short of predictions, refunds are running higher.
Through April 25, refund requests are already more than $2.4 billion.
Total tax receipts less refunds equal the month’s net total.
State Controller John Chiang keeps a daily tally of net income tax collections for April. It shows total collections less refund requests to be nearly $6.5 billion through April 24.
April is also the third largest month for bank and corporation tax collections. The budget estimates just over $1.5 billion will be paid.
Through April 25, $1.3 billion has been received.
Filed under: Budget and Economy
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