The State : State Tax Income Grows

The state took in $93 million more in taxes during December than had been predicted, but some of that money may have been from taxpayers reacting to federal tax reform, the Legislature’s budget analyst said. In addition, the Franchise Tax Board received $410 million in unanticipated revenues at the end of December but did not process the money until early January. Jon David Vasche, senior economist in the legislative analyst’s office, said about $200 million of the $503 million in increased tax revenues “appears to represent a permanent revenue gain.” But he said analysts are uncertain because the Federal Tax Reform Act of 1986 gave taxpayers an incentive to accelerate reporting of capital gains and payments of state income tax. “We will not know until the middle of May, after the personal income tax returns are processed, what portion of these receipts represents a net increase in 1986-87 revenues,” Vasche said.