Revenues flat in March, putting attention on April
(Calif.) Tax collections in March fell just short of expectations by $114 million, but state officials believe the shortfall is likely the result of fewer business days during the month compared to last year.
So far, actual revenue income has come in just over $62 billion for the fiscal year, which is about $3 billion less than estimates made late last year by Gov. Gavin Newsom in preparation for the release of his January spending plan.
According to a report last week from the non-partisan Legislative Analyst, much of the overall deficit relates to losses many big investors experienced during December and January.
But stocks have since rebounded—the Standard & Poor’s index hit a recent low of 2,351 points on December 24, and closed yesterday at close to 2,900.
As a result, most fiscal officers believe the state will recover the lost revenue during April.
The LAO reported that preliminary numbers on March revenues showed personal income tax withholdings were down $171 million for the month when compared to estimates.
Corporate taxes were off by about $19 million.
Sales taxes came in just slightly above expectations.
Collections during this month and June will be critical.
As part of the governor’s January budget, the administration estimated that personal income taxes collected in April will reach $15 billion. With Monday’s tax filing deadline, officials should know a lot about the fiscal condition of the state by the end of this week.
According to the State Controller’s Office, personal income taxes paid during the first five days of the month totaled $1.8 billion.
Last year, personal income taxes accounted for almost 70 percent of all general fund revenues. A significant portion of that money, about 15 percent, was paid in the month of April.
April is also an important month for corporate tax collections. Many companies will file both their final 2018 tax payments this month as well as a payment on their estimated taxes that will come due in 2019.
Newsom and the state’s Democratic majority are watching the revenue collections with great interest. Although the governor was generally prudent with his proposed budget for 2019-20, he does want to fund aggressive new programs to help the homeless, to prevent wildfires and to reduce pension obligations.
The governor’s education budget was more of a status quo for K-12 schools but he does want to increase spending on services for early learners, work force training and child care.