Tuesday, July 12, 2011

Controller John Chiang on State Budget: CASH RECEIPTS ALREADY $351 BEHIND

Capitol Alert

Posted by Kevin Yamamura | http://bit.ly/ojcKad

July 11, 2011 - It didn't take long for California's optimistic budget to fall behind in tax revenues.

Controller John Chiang released data Monday showing that California received $351 million less in May and June than state leaders expected in the budget that Gov. Jerry Brown signed just 12 days ago.

To help close a final $9.6 billion gap, Democratic lawmakers and Brown relied on optimistic assumptions that the state would take in $1.2 billion above projections in May and June, as well as $4 billion more over the following fiscal year. If the state continues to fall short of expectations, it will impose deeper cuts in higher education, social services and K-12 schools under the budget "trigger" deal.

Based on Chiang's data the state is already behind the May-June milepost. He said the state took in only $849 million of the $1.2 billion in extra cash expected during that period - or $351 million less.

"We don't have a detailed cash flow (of Brown's budget) to break it down," said Chiang spokesman Jacob Roper. "We can't look at it and say whether it was softness in corporate tax refunds or excise taxes or withholdings being down."

It's important to keep in mind that this is only negative news relative to optimistic assumptions that lawmakers relied upon to close the deficit. The state did take in more money than analysts projected earlier this year, as well as $1 billion, or 9 percent, more than in June 2010.

While the Department of Finance often releases similar data to the controller's, it remains possible that Finance will provide different June totals later this month based on a different accounting method. Finance was not immediately available for comment.

Update (1:25 p.m.):Senate President Pro Tem Darrell Steinberg, D-Sacramento, said, "We're going to have to look at the numbers over the next six months, of course. The trigger itself, pulled or not pulled, doesn't have to be made until some time in December or January. So I think we need to see whether this is a blip or a trend."

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