Bump in revenues might help schools more than state budget


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State lawmakers, particularly Senate leader Darrell Steinberg (D-Sacramento), have been bullish about California’s recent spate of good news regarding tax collections. For several months, the state has collected more in taxes than expected, with the current haul about $2 billion more than forecast.

But just because the state has collected $2 billion more in taxes doesn’t mean the state’s estimated $20- billion deficit has shrunk to $18 billion.


In a letter to top budget staff sent late last month, nonpartisan Legislative Analyst Mac Taylor warned that the “‘new’ revenues provide much less budgetary solution than on first blush.”

The main reason is Proposition 98, the state’s complex education financing law, which typically requires that roughly 40% of new state revenues go to K-12 schools.

But Taylor estimated in the letter that nearly 60% of the current bump in revenues will be obliged to schools under current law. That may be very good news for public education, Taylor said in an interview, but it won’t necessarily do much to shrink the budget deficit.

“We just want to make sure people are going into this with their eyes open,” Taylor said. “You can’t attribute all of that new revenue to directly addressing the budget problem.”

It is an important warning to remember as budget watchers track the daily revenues reported by the state controller this month, the biggest tax collection month of the year.

-- Shane Goldmacher in Sacramento