The state’s tax revenue windfall could reach $25 billion by the end of the current fiscal year, the Legislative Analyst’s Office stated in an update of its formal revenue outlook for 2021-22, originally published in May.
“We currently project that there is a strong chance that collections from the state’s ‘big three’ taxes – personal income, sales, and corporation taxes – will exceed the budget act assumption of $170 billion in 2021-22,” the analyst wrote. “Our current best estimate is that the amount of unanticipated revenue likely will fall somewhere between $5 billion and $25 billion. As reflected by the width of this range, with so much of the fiscal year ahead of us there remains significant uncertainty about how much the state ultimately will collect. We also caution that the implications of unanticipated revenues for the state’s budget are not straightforward.”
The analyst estimated that an additional $1 of unanticipated revenue results in, on average, about $0.40 of additional state surplus.
California’s general fund tax revenue for the first two months of the 2021-22 fiscal year was $3.5 billion above the budget forecast of $19.3 billion, and revenue for the month of August was $1.99 billion above the forecast of $10.96 billion, the Department of Finance reported September 21.
The governor’s budget department added that preliminary general fund receipts for the entire 2020-21 fiscal year were $4.78 billion above $201.77 billion forecast included in the 2021-22 budget, which was drafted before the 2020-21 fiscal year ended.
Personal income tax revenue for the first two months of the fiscal year was $2.56 billion above the forecast of $12.6 billion. In August alone, PIT revenue was $1.3 billion above the forecast for the month. Refunds issued in August were $102 million below the expected $693 million.
Sales and use tax revenue for the first two months of the fiscal year was $670 million above the forecast of $4.48 billion. The bulk of this came in August, when monthly revenue was $628 million above the budget forecast.
Corporation tax cash revenue for the first two months of the fiscal year was $329 million above the forecast of $956 million.