The state's top fiscal analyst says Gov. Jerry Brown's tax hike would raise $2.1 billion less than he is banking on to balance his new budget, requiring deeper cuts than the governor proposed or more revenues if lawmakers use that estimate.
The Democratic governor is counting on a voter-approved tax increase on sales and the wealthy to generate $6.9 billion for the 2012-13 budget. But the nonpartisan Legislative Analyst's Office says Brown's plan would raise only $4.8 billion in the first budget cycle.
The Analyst's Office and Department of Finance included their separate projections in a joint letter to Attorney General Kamala Harris that is required for ballot preparation.
"The volatility described above makes it difficult to forecast this measure's state revenue gains from high-income taxpayers," stated a joint letter from Legislative Analyst Mac Taylor and Brown's Department of Finance Director Ana Matosantos, after describing how unpredictable state tax revenues have become. "As a result, the estimates from our two offices of this measure's annual revenue increases vary."
Brown said last week he would reduce funding mostly for K-12 schools and colleges if voters reject his tax plan.
It's not clear exactly how a $2.1 billion lower revenue total would affect the governor's plan, but the state would probably owe schools less money under its education funding formula. The state would likely have to find additional cuts in other parts of the budget if the analyst's estimate proves true.
The analyst also estimates that Brown's proposal would raise on average $5.5 billion annually over the next three fiscal years; the governor's Department of Finance has pegged it at $6.9 billion. In 2016-17, when the plan would be in effect for half a fiscal year, Brown says it would raise $3.4 billion, while the analyst says $3.1 billion.
Jason Sisney, the analyst's chief forecaster, said that the two offices were in general agreement on how much sales tax revenue the state would raise under Brown's plan. But they were in dispute over how much the state would obtain from the wealthy, whose income is extremely volatile.
"We're still working to analyze some of those differences ... but given the nature of them, it has to do with our high-income assumptions," Sisney said.
Finance estimated the state would generate nearly $5.8 billion from the income tax hike in the 2012-13 budget cycle, while the Analyst's Office says it is only $3.6 billion.
Brown's assessment suggests the bulk of money would come from upper-income earners each fiscal year. The Analyst's Office says it's a nearly even split during the three full years of implementation, with slightly more money coming from the half-cent sales tax hike.
Update (3:05 p.m.): Includes explanation from Analyst's Office forecaster Jason Sisney, as well as a link to the letter and a breakdown of the tax split.