Tuesday, January 10, 2012


By JUDY LIN, Associated Press from San Francisco Chronicle |http://bit.ly/yJQYnu

Tuesday, January 10, 2012 - 7:12 PST Sacramento, Calif. (AP) ;; Just a week after Gov. Jerry Brown made his pitch for tax hikes and more spending cuts, the state controller on Tuesday reported that California is collecting less tax revenue than the governor projected and warned lawmakers that more cuts may be needed if the slide continues.

Controller John Chiang released his cash report for December and said revenue came in $165 million below what Brown projected last week when he released his budget proposal for the 2012-13 fiscal year, which begins July 1. He said the state's ongoing structural deficit, in which annual spending commitments outpace tax revenue, is continuing despite recent budget cuts.

"Coupled with higher spending tied to unrealized cost savings, these latest revenue figures create growing concern that legislative action may be needed in the near future to ensure that the state can meet its payment obligations," Chiang said in statement.

The Democratic governor estimated the state is facing a $9.2 billion shortfall on a $92.5 billion budget for the next fiscal year. He wants lawmakers to make cuts to welfare, health care for the poor and other social programs before asking voters to pass temporary taxes in November.

Democratic lawmakers, who control the Legislature, have indicated they don't want to make those cuts.

"None of this changes our overarching game plan or the fact that we need to generate more revenues to protect schools from devastating cuts," said Robin Swanson, spokeswoman for Assembly Speaker John Perez. "We're keeping our eye on the ball here, and that means continuing to figure out substantive solutions to our state's long-term budget plans."

The controller's office wrote that late December and early January are an important period for estimating state revenue because many taxpayers send final estimated payments to maximize federal tax deductions for the year. The payments help predict revenue because they reflect what taxpayers think they owe on their annual tax returns.

The state reported that while holiday shopping helped improve sales tax receipts, personal income taxes were $70 million below the governor's latest projection. Corporate taxes were about $20 million below the estimates in December.

Brown's finance spokesman, H.D. Palmer, said the $165 million shortfall was out of $8.4 billion in total cash receipts.

"Put it in perspective," he said.

Palmer said the state should have enough money to get through the fiscal year, which ends June 30.

In releasing his budget proposal last week, Brown made his first campaign pitch for his tax initiative, telling Californians they must choose between paying higher taxes or accepting cuts that would result in three fewer weeks of school, higher college tuition and fewer state park rangers, among other changes.

Without the additional tax revenue, the governor said he will be forced to cut nearly $5 billion to public education along with additional cuts to courts, public universities and other services.

Brown is trying to gather support for a November ballot initiative that would raise the income tax on those making $250,000 or more a year and boost the state sales tax by a half cent. The administration estimated the temporary tax increases would raise about $7 billion a year, but the Legislative Analyst's Office has pegged that figure at around $4.8 billion in additional revenues.

The offices disagree over the amount of revenue to be generated by higher taxes on the wealthy.

The analyst's office is expected to release its assessment of Brown's budget on Wednesday.  [smf: In another premature release, available HERE]  The taxes would expire in 2017.

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