By Tom Chorneau, SI&A Cabinet Report | http://bit.ly/13qSMak
Friday, May 10, 2013 :: It’s official. State Controller John Chiang confirmed earlier this week projections that other agencies were making about the significant increase in tax collections so far this spring, reporting gains that outpaced projections by $4.6 billion.
Led by a jump in personal income taxes, the state’s revenue picture continues to improve even though April itself was down slightly and state spending ran well ahead of estimates. Still, the state’s chief fiscal officer noted the state for the first time in six years didn’t have to raid any internal accounts to pay its bills.
“But, there remains significant debt that must be shed before we can claim victory and these unanticipated revenues provide us with an important opportunity to take further steps toward long-term fiscal stability,” Chiang said in a statement.
Still, the news couldn’t be better for the Brown administration, which is expected to release the revised May budget next week, likely Wednesday. Schools can expect to receive a substantial share of the additional revenues; some insiders believe the governor will use a lot of that money to increase the base funding allocation given to all schools under the Local Control Funding Formula.
While April traditionally was the state’s most critical revenue month, since a change in tax law made in 2009, June has become a close rival, generating as much as $12 billion.
April collection ran just over $15 billion.
It is important to note that the state ended the last fiscal year with a cash deficit of $9.6 billion; by the end of April, that deficit had narrowed to $5.8 billion. The deficit was covered by $10 billion in borrowing from Wall Street, debts that the state will begin paying back this month.
Year-to-date collections have been led by personal income taxes, which have generated $55.8 billion so far, significantly ahead of January estimates of $51.4 billion.
Corporate taxes have been better too, running about $126 million above expectations. Sales taxes, which have been sluggish all year, remain below projections by about $240 million.