May revenues spike, setting up a bigger jump in June?
(Calif.) Even with turbulence in the stock market and unsettling international trade relations, California state coffers will likely end the 2018-19 fiscal year well ahead of predictions made just a few weeks ago.
Led by personal income tax collections, state revenues closed out the first 11 months of the year at nearly $125 billion—or $620 million more than had been forecast as part of the revised May budget, according to new figures from the governor’s Department of Finance.
Those numbers bode well for collections in June, which is one of four months that the state receives more than half of all revenues—the others being January, April and December.
May had been expected to deliver just over $9 billion from all revenue sources. Instead, the total came to almost $9.7 billion. Fiscal analysts attribute this year’s spike to continued strength in the state economy, low unemployment and ongoing profit-taking on Wall Street.
June traditionally provides close to $20 billion.
It is unlikely that a huge upswing in unanticipated revenue will cause legislative leaders to want to reopen budget negotiations. The $215 billion spending plan for 2019-20 won passage out of both houses before the June 15 deadline and is awaiting the governor’s signature.
That said, any unencumbered dollars will likely attract legislative attention before the end of session in September. The governor himself might try to rejuvenate interest in some of his ideas that didn’t make it into the budget.
Among the proposals of interest to the K-12 education community that might get a new look is AB 760 by Assemblyman Jim Cooper, D-Elk Grove, which would provide more money for pupil transportation.
The bill, which failed to get out of the Assembly earlier this year, would add a cost-of-living increase to the existing calculation for school transportation expenses.
According to the nonpartisan Legislative Analyst, schools spent close to $1.4 billion on pupil transportation last year—more than half of that coming out of district general funds.
Another fiscal proposal that might come back is a plan to raise the base grant funding under the Local Control Funding Formula.
AB 39 by Assemblyman Al Muratsuchi, D-Torrance, would have expressed the intent of the Legislature to increase the per-pupil spending to meet the national average by 2020-21. To do so would require a jump of nearly $4,000 per student from the current spending that ranges from $7,571 for grades 4-6 to $9,268 for high school students.
The 2019-20 budget agreement includes a 3.6 percent cost-of-living adjustment within the LCFF but does set any higher funding goals.
Muratsuchi’s bill made it out of the Assembly in May and through the Senate’s education committee earlier this month, but was sent to the suspense file by the Senate Appropriations Committee on Monday.
May’s strong revenue showing came from just two of the state’s biggest sources: personal income tax revenues exceeded the forecast by $383 million while the sales were ahead by $247 million. Meanwhile, corporation taxes came in $135 million below expectations.