California revenues last month lagged 5.5 percent behind what Gov. Jerry Brown expected in his just-proposed January budget, a development that Controller John Chiang termed "disappointing."
Though the big spring revenue months and Facebook's public stock offering are still to come, the latest report may provide a cautionary signal for Democratic lawmakers who think Brown's forecast is too pessimistic.
According to Chiang's office, the state fell $528.4 million behind the governor's latest projection for January, including a $525 million (6.3 percent) shortage in income tax collections. After the first seven months of the fiscal year, the state is $694 million in general fund revenues, or 1.1 percent, behind Brown's latest plan to solve a $9.2 billion deficit through June 2013.
"January revenues were disappointing on almost every front," Chiang said in a statement.
The drop in January income taxes is due largely to lower estimated tax payments and more income tax refunds than expected in January, Chiang's report said. Withholdings were roughly on par with what Brown projected, coming in $19 million above.
Sales taxes were 5.6 percent higher than Brown expected for the month, which the report said "signals that consumers continue to spend money as the economic recovery picks up steam." Corporate tax revenues were $127.9 million shy of projections, or 48.8 percent.
When compared to the budget that Brown and lawmakers approved last year, built on outdated projections from last spring, the January revenue picture is uglier. Compared to that more optimistic budget, the state was $1.2 billion, or 11.9 percent, behind in January revenues. But Brown accounted for roughly $700 million of that in his latest deficit projection.
Chiang made a point of stating that despite the bad month, California won't run out of cash in March now that lawmakers have approved $865 million in borrowing from special state accounts earmarked for programs like transportation.
In a rare move, Brown's Department of Finance issued a two-page memo responding to the controller's revenue report to assert that December and January data don't offer much guidance.
Finance acknowledged the "recent receipts are concerning." But the department also noted, "One quarterly payment - even when there is a significant variance between actual and forecast revenue - is just one data point, insufficient information to draw conclusions or arrive at informed judgments of what is to come."
Because quarterly payments are largely to blame, Finance suggested that some shareholders delayed selling their stock in late 2011 because the market was volatile. If they sell early this year - the S&P 500 index is up 6.76 percent already this year - Finance suggests the state could see stronger quarterly payments in April and June.
Post updated at 1:07 p.m. to include Department of Finance response.