For the fiscal year so far, income taxes are well above expectations, sales and use taxes are pretty much on target, and corporate taxes, the smallest of the state’s Big 3, are lagging a bit.
Overall, the state’s receipts appear that they will be $2 to $2.5 billion above budget estimates. Proposition 98 requires 40% of that to go to local schools. The rest is sure to spark debate.
Administration officials have been careful in person and in official statements over the last couple days to temper any excitement, pointing out that the state still has multi-billion dollar deficits projected for years. They further note that some hoped for savings dissipated when the Legislature didn’t enact them, and that caseloads might have risen above expected levels.
Likewise, State Controller John Chiang cautioned today in his release today of the monthly statement of the receipts and disbursement:
“While April’s revenues were nominally higher than estimates, they did not provide much breathing room in the budget debate,” said Controller John Chiang. “We are a long way from closing the books for this fiscal year. June is still a very important month for revenues, and in that month our outlook could improve or deteriorate significantly.”
That said, what will the Governor do with any unexpected revenue? Will he drop controversial aspects of his January proposal, such as eliminating redevelopment agencies? Will he propose tempering some of the most severe cuts? Save money into the future by paying down debt or socking away a larger reserve? Pile it up in a vault and swim in it?
Any speculation is just that, and this Governor has shown a penchant for surprising those who expect the same-old Sacramento way of operating.
The May Revise is coming out Monday, May 16. Stay tuned.
Geoffrey Neill is CSAC’s legislative analyst for revenue & tax issues. He can be reached at gneill.at.counties.org.