California missed its December revenue target by $1.4 billion due to weak income tax totals, closing the first half of the fiscal year down $2.5 billion compared to the budget enacted in June, according to state Controller John Chiang.
That gap isn't a huge surprise, given that the June budget was overly optimistic.
Gov. Jerry Brown said last month that the state budget would fall $2.2 billion short in the current fiscal year, triggering nearly $1 billion in mid-year budget cuts. He also acknowledged that deficit when he built his new 2012-13 budget proposal, which projects a $9.2 billion shortfall between now and June 2013.
But Chiang said the governor's new budget -- which is built on up-to-date economic data -- was still off the mark by $165 million in December, or 2 percent for the month.
"While we saw positive numbers in November, December's totals failed to meet even the latest revenue projections," Chiang said in a statement. "Coupled with higher spending tied to unrealized cost savings, these latest revenue figures create growing concern that legislative action may be needed in the near future to ensure that the State can meet its payment obligations."
Not only did Brown lower his tax revenue expectations, but he updated his budget to show that state spending has grown beyond what the budget expected. Over the first six months of the fiscal year, the state spent $2.6 billion, or 5 percent, more than what was planned in June.
When Chiang reported higher expenses in previous months, Brown's Department of Finance downplayed it as a matter of timing, suggesting that expenses would even out by June. Some of that is due to courts blocking cuts to Medi-Cal.
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