California’s Revenue Cup Continues to Runneth Over
Net state income tax collections for April climbed to $10.1 billion through April 18 — $1.5 billion more than needed for the $138 billion budget proposed by Democratic Gov. Jerry Brown to remain in balance.
Brown’s January budget plan called for the state to receive $13.3 billion in net income tax receipts in April but because of nearly $5 billion more than expected in January tax payments, only $8.5 billion was necessary in April to stay on target.
Now that the level of tax receipts ensures Brown’s budget numbers are on target, budget writers are already looking ahead to May when the Democratic governor issues a revised spending plan that includes actual revenues from the last four months rather than the january budget’s estimates.
Even so, guesswork will still be involved in deciding how much of the receipts are from an improved economy or from wealthier Californians cashing out capital gains in 2012 before higher federal tax rates kicked in.
“Next month’s updated revenue forecasts from the administration and our office will have to make difficult judgments—based on limited data—about how much of the … revenue gain results from previously unanticipated growth in taxable income and how much results from taxable income ‘accelerated’ from future years to 2012,” writes the Legislative Analyst on its website.
“These forecasts will affect the Proposition 98 minimum funding guarantee for schools and community colleges, as well as the overall state budget situation for” the fiscal year beginning July 1.
The analyst notes that greater-than-expected revenues during the current fiscal year, which ends June 30, would boost the amount of money the state must send schools under Proposition 98’s formulas.
“This (requirement) might limit substantially improvements to the state’s financial bottom line that otherwise would result,” says the analyst.
On April 18, over $1.4 billion was received by the state either from withholding by employers or from individuals making estimated payments for the 2013 tax year.
Refund requests climbed by $293 million to almost $1.9 billion. Brown’s budget expected $2.7 billion in refund requests.
California is also supposed to net $1.5 billion in bank and corporation taxes in April.
Through April 18, $1.1 billion has been collected and $50 million in refund requests filed.
Filed under: Budget and Economy
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