Tax revenue lags as state enters critical month UPDATED


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While California’s bean counters await crucial results from April tax receipts, the state controller said Tuesday that March revenue dipped 4.2% below estimates in the governor’s budget proposal.

‘While revenues continue to fall short, the months ahead will be far more important to the state’s finances,’ Controller John Chiang said in a statement. ‘More than 35% of all revenues are expected in the next three months, making this the most important period for tax collection in the fiscal year.’


The state collected $5.4 billion in revenue in March, which is $233.5 million less than Gov. Jerry Brown’s administration predicted. Just over half of the shortfall is the result of weaker corporate tax revenue, according to the controller’s report.

“Given that the improvement in the economy has yet to bring a major resurgence in revenue –- which underperformed over the last few months –- the problem is likely to persist into the near future,” the report said. “This means that many tough decisions remain for policymakers in Sacramento.”

Much of the state’s revenue is collected in April as residents file their taxes. That means budget negotiations can hinge on the results as the governor prepares his updated spending plan, which is released in May.

[Updated 5:05 p.m. Senate Budget Chairman Mark Leno (D-San Francisco) suggested that corporate tax breaks may be costing the state more money than expected, driving revenue down. He said budget cuts shouldn’t be made until lawmakers get a clearer picture of the state’s finances next month.

But Sen. Bill Emmerson (R-Hemet), the ranking Republican on the budget committee, said Democrats are dragging their feet in making important cuts that Brown has proposed.

‘The Democrats are failing to enact the proposals he put forward,’ he said. ‘The difference gets bigger as we go along.’


Emmerson pointed out that the financial situation is worse when spending and revenues are compared to projections included in the budget enacted last year, with spending up $2.1 billion and tax collection down $3.5 billion.

H.D. Palmer, a spokesman for Brown’s Department of Finance, says projections from last year are out of date.

‘It’s making a comparison to data that have been overtaken by subsequent events,’ he said.]


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-- Chris Megerian in Sacramento

Twitter: @chrismegerian