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California's Tax Revenues Beat Expectations by $1 Billion Over the Summer Months

Thursday, October 18, 2018

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Californians paid some $1 billion in taxes above official projections during the first three months of the state’s fiscal year, in what could be a major boost to the government’s bottom line once Gov. Jerry Brown leaves office in January.

A monthly report issued by the state Department of Finance attributed most of the unexpected revenue — $990 million — from personal income taxes paid between July 1 and Sept. 30. Sales taxes were slightly below expectations written into the budget crafted by Brown and state lawmakers in June, while corporation tax revenues were slightly above forecasts.

The new tax windfall comes on the heels of successive years in which revenues have bested expectations, a streak that has allowed the state to push toward its largest long-term cash reserve ever — $13.8 billion by next summer. But the surprise cash from the state government’s first quarter could be erased by weaker revenue collections in the coming months.

Last month, a review by the independent Legislative Analyst’s Office concluded that “economic conditions are near historical highs and the state’s near-term revenue outlook is strong.” The analysts concluded California’s fiscal health was near the highest point measured at any time in the last quarter of a century. Unemployment rates have also been at or near historic lows; in August, the state reported the fewest number of jobless Californians than at any time since 1990.

Budgets are one of the first items on the to-do list of a new governor. Once voters choose either Democratic Lt. Gov. Gavin Newsom or Republican businessman John Cox next month, the governor-elect will have only a matter of weeks to weigh in on economic projections that will be used to craft his first budget. That spending plan must be submitted to the Legislature just days after the governor takes the oath of office on Jan. 7.

Source: The Los Angeles Times

Category: Economic Development,