Capitol Alert

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California has fallen $1.5 billion behind in revenues through the first four months of the fiscal year, according to state Controller John Chiang, amplifying fears the state will impose deeper budget cuts this winter.

For the month of October, Chiang said California was $810.5 million behind what was expected, or 16.3 percent. Notably, the state missed its personal income tax estimate by $451 million, or 12.9 percent, which the Franchise Tax Board attributed to both lower withholdings and estimated tax payments.

The state also faced spending pressures through the first four months of the year. Chiang reported that California spent $1.7 billion more than budget writers expected.

Under the budget deal Gov. Jerry Brown signed in June, the state will automatically cut a variety of programs depending on how deep budget analysts determine the revenue shortfall will be. If the state falls between $1 billion and $2 billion short, the budget calls for cuts in higher education, social services and public safety. If the state falls more than $2 billion short, the state will cut K-12 schools and community colleges. More on this here.

The depth of the state's revenue shortfall so far has caused concern among program beneficiaries and leaders. However, it is not a given that the state will pull those triggers in December even if the state ends up more than $2 billion shy in revenues by that point. As Assembly officials noted last week, it remains possible that the Department of Finance and Legislative Analyst's Office will say in the coming weeks that California can make up that gap with a burst of spring revenues.

To help close the budget in June, Brown and lawmakers relied on a $4 billion optimistic bump in revenues over the 2011-12 fiscal year, a calculation that has grown in controversy every month the state falls short of hitting its estimates.

"October's poor revenues capped a very disappointing first four months of the fiscal year," Chiang said in a statement. "Unless revenues and expenditures begin to track with projections, the state will face increasing cash pressure in the months ahead."



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