Shane Goldmacher | LA Times Poltical | http://lat.ms/oCLdZD
August 9, 2011 | 12:44 pm - California’s tax revenues plummeted in July, falling more than 10% below expectations and making it more likely that deeper cuts to public schools built into the state budget in case of a stalled economic recovery will occur.
Gov. Jerry Brown and state lawmakers patched up the final $4 billion of California’s budget shortfall this year by hoping for a windfall economic recovery. Those hopes are now fading fast.
Tax collections in July were $538.8 million below budget forecasts, according to state Controller John Chiang.
Income taxes were up slightly, but sales and corporate collections lagged by a combined nearly $210 million. But the biggest drag was from the unidentified $4 billion that budget writers had banked on.
“Every drop in revenues puts us closer to the drastic trigger cuts that could be imposed next year," Chiang said in a statement. Those automatic cuts include a reduction in schools spending that could shrink the academic year by as many as seven days in some districts.
Worse, the sagging tax collections were reported before the recent stock market turmoil. The Dow Jones industrial average plunged by more than 600 points on Monday. California relies very heavily on capital gains taxes from the stock taxes.
Controller Releases July Cash Update
PRESS RELEASE: California State Controller's Office, Controller John Chiang | http://1.usa.gov/mTV69r
8/9/2011 - SACRAMENTO – State Controller John Chiang today released his monthly report covering California's cash balance, receipts and disbursements in July, showing revenues were down $538.8 million (-10.3 percent) below projections from the recently passed state budget.
"While July's revenues performed remarkably similar to last year's, they still did not meet the budget's projections," said Chiang. "While we hope for better news in the months ahead, every drop in revenues puts us closer to the drastic trigger cuts that could be imposed next year."
Income taxes were above projections by $89 million (2.9 percent) in July. But sales taxes were down $139.4 million (-12.5 percent), and corporate taxes were down $69.5 million (-19.3 percent) in the same month.
The State faced an $11.1 billion cash deficit on July 31. That deficit was covered by internal borrowing, or short-term loans from special funds, along with external borrowing.
Additional Coverage from Google news
San Francisco Chronicle - 18 hours ago
California State Controller John Chiang attends the inauguration of Attorney General Kamala Harris at the California Museum for History, Women and the Arts on January 3, 2011 in Sacramento, California. (Paul Kitagaki Jr./Sacramento Bee/MCT) ...
July income was $539 million lower than expected, leading many to doubt the state budget's assumption of economic recovery and a $4-billion windfall. If revenues remain low, drastic education cuts will kick in. State Controller John Chiang, right, ...
Wall Street Journal - Aug 9, 2011
By VAUHINI VARA California's revenue is already coming in short of Gov. Jerry Brown's optimistic expectations for the fiscal year that began on July 1, an early indication of the toll the economy is still taking on states across the country. ...
Reuters - Jim Christie - Aug 9, 2011
SAN FRANCISCO (Reuters) - The stock market's recent slump is reviving bad memories for California's government and raising concerns about revenue estimates for its budget, a perennial concern in the US municipal debt market. ...
California faces “drastic” cuts to universities, schools and social programs if revenue continues to trail budget forecasts, the state controller said after July collections fell ...
Fox and Hounds Daily (blog) - John Wildermuth - 6 hours ago
If the state budget is supposed to be a blueprint, this is one funny structure California is building. One month into the new fiscal year and the state is already 10 percent short of what it needs to keep the budget balanced. ...
NBC Bay Area (blog) - Kevin Riggs - 7 hours ago
Here's some shaky Sacramento math for you. State Controller John Chiang announced Tuesday that tax revenues were actually up by $40 million in July, compared to a year ago. Because the budget approved by the legislature and Gov. ...
24/7 Wall St. (blog) - 13 hours ago
California is terribly low on money once again. State Controller John Chiang issued a report in which his office said its “monthly report covering California's cash balance, receipts and disbursements in July, showing revenues were down $538.8 million ...
State Tax Revenue Falls Below Expectations
NBC Bay Area - Mary Harris - 4 hours ago
File Photo: California Gov. Jerry Brown stands next to a chart that shows dollar amounts in the millions that were cut from the state's budget following a bill signing on March 24, 2011. The state's tax revenue for the month of July was ...