State Controller John Chiang reported Wednesday that California collected $1.28 billion more in January tax revenues than Gov. Arnold Schwarzenegger projected in his current budget plan, although Chiang warned that the "state cannot be lulled into a false sense of security."
The January figures marked an 18.6 percent increase above projections for the month. Each of the three major sources of revenues were higher than anticipated, led nominally by personal income taxes, which came in $930 million above expectations for January. Corporate tax revenues were above projections by $189 million and sales taxes were up $157 million.
Through the first seven months of the 2009-10 fiscal year, California has received $459 million more than projected, Chiang said.
Department of Finance spokesman H.D. Palmer said Wednesday that the higher income-tax revenues may have been the result of a robust stock market in the fourth quarter of 2009, which can show up in quarterly tax payments due in January. It may also have been the result of how taxpayers chose to time their quarterly payments.
The higher-than-expected revenues caused Chiang to adjust his cash projections such that California will remain in positive territory until July, even without further action by the Legislature. The controller previously warned that the state was due to sink into the red on April 1; his newest figures show that the state would have a thin, yet positive, $500 million cash cushion on that day.
State leaders generally want a $2.5 billion cash cushion to ensure the state can pay its bills, so Chiang warned Wednesday that lawmakers still should take swift action to increase the state's cash holdings in April.
"The positive receipts are welcome news, but the state cannot be lulled into a false sense of security," Chiang said in a statement. "Our cash position falls below safe levels this spring and goes into the red this summer. Our chronic budget shortfalls require credible and sustainable fixes in order to protect taxpayers, local governments, and state funded programs."
Of concern, Chiang noted, is that the state has had to pay $586 million more than anticipated during the first seven months of the 2009-10 fiscal year.
The Senate Budget Committee on Thursday is expected to consider $1 billion in cash deferrals to provide a stronger cushion in April.
The cash situation is separate from the state's $19.9 billion deficit problem, although the state's budget woes have an impact on its cash flow. Chiang still projects that California will run out of cash to pay its bills in July, largely because the state receives a significant share of its tax revenues late in the fiscal year.
To deal with the timing problem, the state usually takes out short-term loans. But it has trouble borrowing without a credible, balanced budget in place.
PHOTO CREDIT: Gov. Arnold Schwarzenegger, speaks with State Controller John Chiang after he delivered an address to the state Legislature, urging them to take quick budget action on Tuesday, June 2, 2009. Hector Amezcua/Sacramento Bee
Latest posts:
About Comments
Reader comments on Sacbee.com are the opinions of the writer, not The Sacramento Bee. If you see an objectionable comment, click the "report abuse" button below it. We will delete comments containing inappropriate links, obscenities, hate speech, and personal attacks. Flagrant or repeat violators will be banned. See more about comments here.