To those who chart state government finances, tax revenues during the second quarter of each year loom large because income taxes are the largest source of income and they peak as the annual tax return deadline arrives in April.
Just as fourth quarter holiday gift sales can make or break retailers' year, second quarter tax collections tell state budget writers whether will enjoy surpluses or face budget deficits. And a new Census Bureau report shows how California's second quarter revenues have gone up and down in the last decade.
California's second quarter revenues this year were $35.14 billion, roughly a third of the state's general and special fund income for the year, but that was $1.8 billion less than the same period of 2011, thanks largely to a big drop in sales taxes due to expiration of a temporary half-cent increase sales tax increase.
Second quarter revenues this year were, however, more than 50 percent higher than the $22.8 billion recorded a decade earlier in 2002 and personal income taxes this year were 67 percent higher.
State revenues climbed steadily during the years that followed 2002 and peaked out at $38.2 billion during the second quarter of 2007 as the state enjoyed an economic boom based on housing, then dropped as the housing market collapsed and the worst recession since the Great Depression hit the state.
With huge budget deficits looming, then-Gov. Arnold Schwarzenegger and legislators passed temporary increases in sales and income taxes in 2009, but they were short-circuited by voters later that year. The income tax boost expired at the end of 2010 and the sales tax hike ended on June 30, 2011, as Republicans rejected Gov. Jerry Brown's pleas to extend the taxes until voters could decide again whether to continue them.
Brown is now asking voters for a quarter-cent increase in sales taxes and income tax hikes on the top 1 percent of California taxpayers. If successful, Proposition 30 would temporarily raise state revenues by an estimated $6 billion a year.