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.
For more details, read July 2011's financial statement and summary analysis.
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