August revenues up, state economy at ‘historic high’
(Calif.) Revenues in August came in an impressive 13 percent higher than had been expected, giving the state an early $850 million cushion above estimates for the first two months of the fiscal year.
Personal income taxes, by far the state’s most important sources of revenue, produced just under $6 billion for the month.
That amount exceeded projections made only weeks earlier as part of the 2018-19 budget process by $440 million.
The new numbers from the state controller’s office show tax income has been surprisingly strong three straight months.
June, which has emerged as a rival to April as the state’s most important month for collections, brought in $2.3 billion more than expected.
In July, personal income taxes accounted for a total of $5.22 billion, and were $231.7 million, or 4.6 percent, more than estimates.
Sales taxes, which fell unexpectedly last month, rebounded to $3.5 billion in August, which is $766 million or 45 percent more than estimates.
The sales tax total reverses a drop in July of almost 45 percent, which has been attributed to the impact of a new system the state has employed for collecting the money, according to the non-partisan Legislative Analyst. If so, the LAO said, the state will likely make up the sales tax losses in the coming months.
In August, corporate taxes came in 45 percent lower than expected, at $92 million.
Overall, the California economy is showing historically strong revenue growth.
Indeed, the LAO reported earlier this month the creation of a State Fiscal Health Index, which expresses a value from zero to 100 based on such factors as the housing market, unemployment, port traffic and new car sales.
As of July, the LAO’s index places the state at the 97 mark, which is at or near the top of a matrix that dates back to 1994.
“This suggests that economic conditions are near historical highs and the state’s near term revenue outlook is strong,” the LAO said. “But it is worth noting that economic conditions have not remained at such elevated levels for an extended period of time in the past.”
Researchers at the LAO noted that the change from month to month signals the overall direction of the state’s economy. Once again, there is good news when the monthly change is considered.
The index has grown consistently, increasing from 87 six months ago and 82 in July, 2017, the LAO said.