Sales tax fades as fuel for California government

SACRAMENTO -- More than three decades ago, 53 cents of every dollar Californians spent generated sales tax revenue for the state.

It’s been a long slide since then, dropping to only 33 cents last year.

Even though the sales tax remains Sacramento’s second-biggest source of revenue, it’s grown much more slowly over the years.

As healthcare and housing make up a greater portion of Californians’ expenses, residents are spending relatively less on taxable items like clothing and electronics, according to a Monday report from the nonpartisan Legislative Analyst’s Office.


Californians are also spending more on services such as financial advising and education, which aren’t subject to the sales tax.

Sales tax revenue was 1.4% higher than the most recent estimates from Gov. Jerry Brown’s administration, generating an extra $297 million. But over the years, sales tax revenue has declined when compared to the overall economy, the report said.

“Absent further increases in the sales tax rate or expansion of its base,” the report said, “sales tax revenues for the state and local governments are likely to grow slower than the economy for at least the near future.”

California state government has become increasingly reliant on income taxes, particularly those paid by wealthy residents. The result has been an unstable tax system that can yo-yo along with the stock market.


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Twitter: @chrismegerian