February revenues slump modestly
(Calif.) February tax collections fell slightly under estimates, but a good part of the shortfall was the result of the state having to issue more tax returns than expected.
Backed by strong showings in both December and January, state revenues remain 3.1 percent higher than estimates in the governor’s January spending plan and 6 percent higher than projections made last summer with the adoption of the 2017-18 budget.
For the first eight months of the fiscal year, the state has collected a total of $81 billion, which is more than 10 percent higher than last year.
Of the big three sources of general fund money, personal income taxes produced just under $3 billion for the state during the month of February, which was $505 million below expectations.
The state controller’s office reported that more than half of that loss was the result of higher refunds than had been anticipated.
Personal income taxes, which is by far the largest source of tax funds to the state, still exceeds projections from the July budget agreement by almost $3 billion.
Sales tax revenue came in almost $23 million above estimates in the governor’s January budget. For the fiscal year, sales tax receipts are $421.6 million higher than the enacted budget’s expectations.
Last month, taxes paid by corporations totaled $164 million, which was 23 percent higher than expected. To date, corporate taxes are running almost 30 percent higher than expected.
Unexpected swings in revenue has become the norm since Donald Trump’s upset presidential victory in November, 2016 that also brought a Republican majority in control of Congress.
With the GOP firmly in charge, big Wall Street investors went on a buying spree that sent the stock market into record territory almost daily. But what the investors didn’t do, at least at first, was cash in their profits, =instead opting to wait for Trump to make good on his campaign promise to cut taxes.
When the tax bill got signed into law just before the end of 2017, state income tax collections surged through the end of December and through much of January.
December collections were almost $4 billion ahead of estimates and January ended with $2.7 billion more than expected.
February is not typically one of the major tax collections months for California. Traditionally, the big revenue months are September, December, January, April and June.
That means budget analysts will be watching daily collections as the April 15 tax deadline approaches.