According to Controller John Chiang's personal income tax collection tracker, state fiscal gurus over-estimated April personal income tax collections by more than $3 billion – a whopping 30 percent estimating error.
Instead of the $10.2 billion estimated to be collected, only $7.15 billion actually was received. It is not clear who is responsible for this estimating outrage, but officials are scrambling to try to explain why it happened. H.D. Palmer, the Department of Finance's spokesman, said the shortfall might be due to lower unincorporated business revenue, timing of the tax laws and losses from capital gains.
Controller Chiang said, "It highlights the fact that the governor and Legislature need to get to work and get a budget in place as quickly as possible that has strong, tough solutions to what the state currently faces."
In total, the Controller's Office reported that receipts for all taxes in April dropped $3.6 billion below the January budget estimate. For the first 10 months of the fiscal year, year-to-date revenues are $1.3 billion behind January estimates.
(Cal-Tax: We think another major factor in the estimating error is the change made last year requiring overwithholding and front-loaded estimated tax payments. ABX4 17, by the Assembly Budget Committee, increased withholding by 10 percent and front-loaded estimated tax payments – 30 percent in April, 40 percent in June. Some taxpayers may be responding by reducing their 30 percent estimated tax payment in April to account for the overwithholding.)
In other budget-related news:
Legislators Frustrated With BOE Building Issues. At the May 6 hearing, the Senate budget subcommittee members expressed frustration at the increasing sums being poured into trying to fix a "sick building" – the Board of Equalization headquarters at 450 N Street in Sacramento. Senator Ducheny said it was bad news when the state bought the "stupid" building (in January 2007), and she asked if it would be cheaper to move the BOE employees elsewhere.
The committee was told about the $60 million being spent on fixing up the building, in addition to the costs of lost productivity as offices are moved from floor to floor to stay out of the construction zones.
Liz Houser, representing the BOE, said that when the remediation is completed, there still will be mold in the walls.
A representative from the Department of General Services, which owns the building and serves as the BOE's landlord, said the department has received no "official" request to move. The Department of Finance also took a hard line on the building, saying the state has sunk a lot of money into the structure, and cannot afford to walk away from it now. (Cal-Tax: The state has spent probably twice what the building is worth.)
Senator Ducheny said it would have been nice if this building would have been on the list of state buildings to be sold to raise money for deficit-reduction.
Senator Robert Dutton said the state should swap buildings with the California Public Employees' Retirement System, from whom the building was purchased. He also observed that if a private entity owned the building, the government would have shut it down long ago.
Cal-TaxReports, May 10, 2010
© 2010 California Taxpayers'
Association.
All Rights Reserved.