California’s general fund tax revenue is $13.9 billion above the forecast in the 2021-22 state budget, the Department of Finance (DOF) reported October 22.
The report was foreshadowed by Governor Gavin Newsom, who cited the $14 billion figure October 20 when he announced that the state government will have another “historic budget surplus” in the next fiscal year.
Newsom said that when he releases his 2022-23 budget proposal in January, “I’ll be announcing another historic budget surplus, record reserves, paying down $11.3 billion in pension obligations.”
The DOF report detailed the figure:
“Preliminary General Fund agency cash receipts for the first three months of the 2021-22 fiscal year were $9.145 billion above the 2021-22 Budget Act forecast of $33.235 billion. Cash receipts for the month of September were $5.617 billion above the forecast of $13.893 billion. Preliminary General Fund agency cash receipts for the entire 2020-21 fiscal year were $4.783 billion above the 2021-22 Budget Act forecast of $201.775 billion, or 2.4 percent above forecast. When this prior fiscal year-end amount is combined with the current fiscal year-to-date total, preliminary General Fund agency cash receipts are $13.928 billion above the 2021-22 Budget Act forecast.”
The state’s “big three” taxes all are beating projections by significant amounts:
- Personal income tax cash revenue for the first three months of the fiscal year was $6.56 billion above the forecast of $22 billion.
- Sales and use tax revenue was $1.03 billion above the forecast of $6.68 billion.
- Corporation tax revenue was $1.45 billion above the forecast of $2.74 billion.
The Legislative Analyst’s Office last week projected that “there is a good 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 by at least several billion dollars.”
The analyst said its best estimate is that “there will be somewhere between $8 billion and $30 billion in unanticipated revenue,” and that the width of this range reflects that “with so much of the fiscal year ahead of us there remains significant uncertainty about how much the state ultimately will collect.”
The DOF also reported that California’s unemployment rate remained unchanged at 7.5 percent in September, while the national unemployment rate fell 0.4 percentage points to 4.8 percent.