Revenue from the state government’s three largest taxes beat budget projections by $3 billion (21 percent) for the month of December, the Legislative Analyst’s Office (LAO) reported January 20.
The projections for the personal income tax, corporation tax and sales tax were included in the 2020-21 budget approved by the Legislature and governor in June.
“Collections beat expectations across all components of the three taxes, with income tax withholding being the single largest contributor to higher-than-expected collections,” the LAO staff wrote in an online update. “The December withholding total of $9.5 billion exceeded the previous monthly record by more than $1.5 billion, suggesting that year-end bonuses were unusually high in 2020.”
The positive news builds on the LAO’s prior report that revenue from the three taxes came in $2.4 billion (33 percent) ahead of budget projections for the month of November.
“Tax collections have been coming in well ahead of projections for several months,” the LAO stated in a mid-December update. At the time, total collections for the 2020-21 fiscal year, which began July 1, were $13.8 billion (24 percent) ahead of budget expectations.
“The revenue windfall illustrates the prudence of the governor’s declaration that tax increases are not part of the discussions for the 2021-22 budget,” CalTax President Robert Gutierrez said.