California missed its November revenue target by $806.8 million, or 10.8 percent, after a bad projection about tax proceeds from Facebook insiders and an unexpectedly high amount of corporate refunds, the State Controller's Office said Friday.
State budget writers assumed that Facebook insiders would sell a large batch of stock in November at $35 per share, resulting in a tax windfall for the state. But those insiders executed their transactions a month early, state officials say, resulting in more money than expected in October but far less in November. Not only that, but until late November, Facebook shares had been trading below $25 per share.
Those factors contributed to California missing its November personal income tax target by $842.5 million, or 19.0 percent. By comparison, the state exceeded its October target by $378.4 million.
California also paid out an unexpectedly large number of business tax refunds, contributing to a $187.8 million loss in corporate tax revenues for the month. Sales taxes were $99 million above expectations.
"November's disappointing revenues stand in stark contrast to recent news that California is leading the nation in job growth, has significantly improved its cash liquidity to pay bills, and even long-distressed home values are starting to inch upward," Controller John Chiang said in a statement. "This serves as a sobering reminder that, while the economy is expanding, it is doing so at a slow and uneven pace that will require the state to exercise care and discipline in how its fiscal affairs are managed in the coming year."
For the first five months of the fiscal year, the state has taken in $802.4 million less in revenues than expected, equal to 2.6 percent. The State Controller's Office also says the state has spent $2.1 billion more than expected.
State revenues and expenditures fluctuate throughout the fiscal year due to timing of payments and program spending. The bulk of additional 2012 tax revenue from just-approved Proposition 30, for instance, is not expected until April.
The nonpartisan Legislative Analyst's Office has projected a $1.9 billion deficit between now and June 2014.
PHOTO CREDIT: State Controller John Chiang at The Sacramento Bee Capitol Bureau in 2010. The Sacramento Bee / Hector Amezcua