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.
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.