End-of-June Tally: Income and Corporate Taxes Roughly $450 Million Higher Than Expected
The state will likely end June with $450 million more in income tax collections than expected, according to the Franchise Tax Board and Employment Development Department.
Corporate taxes, which were running ahead of Brown administration estimates, could end slightly below them after a $103 million surge in refund requests logged on June 26.
“The simplest possibility is that underlying economic conditions — particularly the investment and business income related to estimated tax payments — is stronger than assumed,” said Jason Sisney of the Legislative Analyst’s Office. “If this is the case, it’s possible annual revenues are trending above (budget) projections.”
More-than-expected tax receipts is welcome news to budget writers, both in the Brown administration and the Democratic majority Legislature, because increased revenue means less spending cuts during the fiscal year that begins July 1.
The budget signed by Gov. Jerry Brown on June 27 closes an estimated $15.7 billion gap between revenues and spending commitments but is premised on receipt of $5.9 billion in additional revenue from increased income tax rates and a quarter-cent bump in the sales tax — if voters approve a ballot measure in November backed by the Democratic governor.
Besting revenue estimates by nearly half-a-billion dollars in one month leavens at least some of the impact if voters reject Brown’s initiative.
Income tax revenues paid to the Franchise Tax Board through June 28 are $473 million ahead of budget estimates, according to the board’s daily tally sheet.
Month-to-date, the board reports receiving nearly $4.2 billion in income tax payments and more than $227 million in refund requests.
Brown’s revised budget, unveiled in May, expected $3.75 billion to be collected by the board in June, less $291 million in refunds.
June has become the second largest revenue collection month for the state – almost as big as April.
That’s because the September estimated tax payment was eliminated in 2009 and the second quarter – payable June 15 – was bumped up from 30 percent to 40 percent of what’s expected to be owed for taxes next April.
Overall, Brown’s budget expects a total of $6.9 billion in income tax payments this June, less the $291 million in refunds.
Of the net $6.6 billion, $3.1 billion is the money employers withhold from employee paychecks. That’s sent to the Employment Development Department.
Withholding collections are done for the month. Payments were $44 million below the $3.1 billion estimated in the budget.
If last year is any indicator, the tax board will receive another $20 million to $30 million before the end of the month.
Combining the withholding and expected tax board receipts for the month equals roughly $450 million.
June is also a big month for bank and corporations collections.
A June 26 surge in corporate refund requests now has corporate tax collections running slightly south of Brown administration estimates.
The governor’s Department of Finance expects $2 billion in corporate taxes less $67 million in refunds for a net of roughly $1.9 billion.
Although nearly $2.1 billion in taxes have been collected, $103 million in refund requests were logged June 26 bringing the month’s total to $151 million – more than double Brown’s estimate – and driving the collections closer to assumptions in the Democratic governor’s revised budget.
Filed under: Budget and Economy
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