September revenues bring surprise upswing
(Calif.) With the first quarter of the fiscal year in the books, revenue collections for the state have exceeded expectations by slightly more than $1 billion, producing an overall total of $27.5 billion.
Leading the way during the important month of September were personal income taxes, which came in $260 million above estimates made only a few weeks earlier during the budget negotiations in June.
Income taxes to date are running $990 million ahead of forecast, according to a new report from the governor’s Department of Finance.
The spike from income taxes more than offset an unexpected $61 million dip in collections so far this year from sales taxes. Receipts in September for sales taxes were also weak, falling $31 million below forecasts.
Corporate taxes have so far been relatively close to what analysts thought would have been collected. To date, corporate taxes exceeded expectations by $66 million with last month’s collection itself coming in at $60 million more than estimates.
The numbers continue to paint a rosy outlook for state coffers, which continue to benefit from the rising stock market.
Although there has been some recent selling, the Standard & Poor’s 500 Index has risen from about 2,130 in October of 2017 to above 2,800 this month—topping out at 2,929 in the middle of September.
As investors cash in some of their profits, California, like many states, receives a substantial share through capital gains taxes.
Also increasingly important for California are the so-called estimated payments—typically income from high-earners who are either self-employed or derive substantial income from stock dividends, interest payments or rent.
The non-partisan Legislative Analyst reported earlier this month that estimated payments in September came in $627 million above expectations.
The next month to keep an eye on will be December. Last year, December saw a surge of nearly $4 billion come in above projections, powered largely by the federal tax restructuring passed by Congress just before Christmas.