State Budget:
Revenues Coming In Above Estimates, Controller Reports

State Controller John Chiang released his monthly report April 8, covering California's cash balance, receipts and disbursements in March. The month's receipts rose above the governor's 2010-11 budget estimates by $356 million, or 5.9 percent.

"March numbers were strong on both sides of the ledger. Receipts came in above projections and expenditures came in below," Mr. Chiang said. "But the state's nagging unemployment rate, combined with the fact that personal income tax revenues are trailing last year's by nearly $1 billion, tells us the road to recovery will be long and arduous."

Total state disbursements were $450 million lower than expected. Year-to-date revenues are ahead of budget estimates by $2.3 billion, or 4.1 percent.

Corporate taxpayers were almost totally responsible for the good news on the revenue side. Corporate tax collections were $516 million above estimates. Personal income tax revenues are tracking estimates closely, coming in $8.4 million (0.4 percent) above estimates. Unfortunately for the state's economy, sales tax revenue fell $264 million (11.2 percent) below estimates in March. The extent of the sales tax shortfall that is attributable to the 1 percent sales tax increase and additional local sales tax increases is unknown.

Although budget subcommittees have been holding hearings, there has been no sign of real budget negotiations in recent weeks, attributable to at least three factors: the spring break, some legislators' desire to avoid voting for tax hikes or spending cuts as they campaign for re-election, and legislators' hope that tax revenue will continue exceed expectations when money comes in from April 15 personal income tax payments.

In other budget-related news:

Senate Committee OKs Governor's Budget Director. The Senate Rules Committee voted unanimously April 7 to recommend that the Senate confirm Ana Matosantos (right, with Cal-Tax President Teresa Casazza) as director of the Department of Finance. Ms. Matosantos was appointed to the position by Governor Arnold Schwarzenegger on December 31, and is able to serve while the Senate considers her appointment.

Ms. Matosantos succeeds Mike Genest, who left the Schwarzenegger administration to form a consulting firm that is working with California Forward.

Cal-TaxReports, April 12, 2010

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