With three work days left in April, state tax collections look to be outpacing projections once again, even, perhaps, out-running the more optimstic view of the Legislative Analyst.
This is thanks in part to what must have been one of the single biggest days ever for collections of the personal income tax on Monday, when $2.7 billion was counted at the Franchise Tax Board in the haul from the weekend mail. Combined with another $700 million collected today, that puts the month's take at more than $8 billion, less about $1.7 billion in refunds that have been mailed out. That's just about the total that was projected for the entire month. The final three days of April are always unpredictable. Sometimes the money falls off sharply, but other times, as it did last year, it keeps on coming right through the end of the month. So the state could easily see somewhere between $500 million and $1 billion more by Friday. The corporate income tax, meanwhile, has also met its projection for the month and will likely top it by $100 million or more.
Coming into this month, the state was already running about $1 billion ahead of projections. The legislative analyst's forecast for this year and next year combined was $2.3 billion higher than the governor's. But the LAO saw only $1.3 billion of that coming in this year, and $1 billion next year. So it's starting to look as if even that rosy projection was at least a little on the low side.
All of this means that the governor's revised budget in May will probably have $2 billion or so in new money from the current year and an increased projection for the budget year on the same order of magnitude. Schwarzenegger's most difficult chore will be finding ways not to spend it -- or at least finding ways not to commit what might be short-term money to long-term obligations. With the housing market softening or perhaps cratering, and construction employment weakening, we could be in the midst of a mini-version of the dot-com boom and bust. The long-term structural deficit, even with this new money, is still going to be somewhere in the neighborhood of $5 billion.
One obvious possibility for the governor would be a huge one-time payment to schools to satisfy the demands of the education lobby, which maintains that the governor and the Legislature illegally shorted them $3 billion over the past two years. But until now, the governor's finance people have said there is no way to give the schools that money without building into the base from which future budgets would have to grow. Doing it in the context of a lawsuit settlement might be one way to give the schools the money now without having to guarantee it to them in future years. Even the CTA agrees that this is the limit of the state's legal obligation. Ideally, the money would go into local reserves to cushion them against any more tight times that might be coming in the years ahead.
But we are getting ahead of ourselves here. Let's see what the post office brings to the tax collector over the next three days.
Posted by dweintraub at 4:02 PM
Here is the latest Angelides ad, again featuring his three daughters. I continue to believe that this is a schmaltzy way to make the pitch for a candidate for governor of the largest state in the union. I suppose the campaign is trying to balance his main message -- the tough fighter -- with his softer side. I just don't think it works. His best message for the Democratic primary audience s that he is the only candidate with a plan to balance the budget and increase school funding -- by taxing big business and the rich. He says it all the time on the stump but doesn't seem to want to trumpet it -- or even mention it -- in his television commercials.
Posted by dweintraub at 3:10 PM
The Claremont Institute has an update on that Long Beach church that was threatened with eminent domain by the city. It's been spared.
Posted by dweintraub at 2:55 PM
In this paper for the Progressive Policy Institute, Stephen Rose explains to Democrats why class warfare is a losing strategy for rebuilding a governing majority in this country.
Posted by dweintraub at 8:49 AM
A bill that would slap a "windfall profits tax" on Californians who sell their houses for more than a 10 percent profit --- oh, sorry, no such bill. A bill that would slap a new tax on oil company profits passed in a key legislative committee Monday. Ap has the story via the Mercury News.
Posted by dweintraub at 7:53 AM