The Legislature’s nonpartisan fiscal analyst continues to believe that the state will collect an additional $1 billion to $2 billion, and maybe more, through June compared to what the Brown administration estimated in its January spending plan.
In a new review of incomes, sales and corporate tax collections, the Legislative Analyst’s Office reports that January revenue was about $512 million above estimates in the budget plan released by Gov. Jerry Brown last month. But the biggest piece of that – $500 million in additional sales-tax money generated by holiday sales – is likely a quirk of timing because January ended on a weekend.
“This all suggests that February sales taxes will fall below projections by a large amount,” the LAO reported.
Overall, though, the analyst’s office remains “of the opinion that 2014-15 General Fund revenues are likely to exceed the administration's new projections by $1 billion to $2 billion and perhaps more, barring a sustained stock market drop between now and June,” the office reported.
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Additional income and corporate tax revenue comes with potential downsides, though. Virtually all of the money will be absorbed by the state’s constitutional school-funding guarantee, levels that may be hard to maintain if revenue falls.
Little of the new money, meanwhile, is available for other, non-school programs. And higher revenue likely would increase how much money has to be set aside to pay off debt and for the state’s rainy-day reserve, the LAO concludes.
Call Jim Miller, Bee Capitol Bureau, (916) 326-5521. Follow him on Twitter @jimmiller2.