California taxes surge in January, report says
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California was flooded with tax dollars in January, according to a new report, and the state received $5 billion more revenue this month than Gov. Jerry Brown had anticipated.
The Wednesday report from the Legislative Analyst’s Office shows a stark reversal for the state budget. At the end of November, tax revenue had fallen almost $1 billion short in the current fiscal year, according to figures from Brown’s Department of Finance.
Now the state appears to be $5 billion ahead, which could provide further evidence for the governor’s declaration that California has emerged from its financial crisis.
The analyst’s office floated three possible causes for the surge in tax revenue. The most positive theory is also the simplest -- the economy has improved and there’s more income to tax.
The others are less optimistic. It’s possible that wealthy residents, fearful that federal budget negotiations would increase their taxes, decided to cash out investments early. If so, that means the state could see less tax revenue in the next fiscal year.
It could also be an issue of timing -- this year, residents may end up paying more of their taxes in January and less in April.
In addition, there’s an important caveat to the positive news from the Legislative Analyst’s Office. Much of the extra revenue could be gobbled up by the state’s constitutional school funding formula, said Jason Sisney, a deputy legislative analyst.
“There are certainly scenarios where the increased revenue is entirely consumed by Proposition 98,’ he said.
-- Chris Megerian in Sacramento