State Budget

California’s revenue outlook continues to be very positive, the Legislative Analyst’s Office (LAO) reported, as personal income tax withholding collections from September 1 to September 24 were 23.5 percent ($1.2 billion) above the same period in 2020. For the entire 2021-22 fiscal year up to September 24, withholding collections were 22.5 percent above the same period in 2020-21, the LAO added. California employers’ income tax withholding payments “can provide a real-time indication of the direction and magnitude of the aggregate…

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…

General fund tax revenue for July, the first month of the 2021-22 fiscal year, was $1.54 billion above the $8.38 billion forecast in the recently approved state budget, the Department of Finance announced August 23. The department added that general fund revenue for the entire 2020-21 fiscal year was $4.78 billion (2.4 percent) above the $201.78 billion forecast in the new budget, which was put together before the fiscal year ended. Personal income tax revenue for July was $1.22 billion…

Democratic legislative leaders announced June 1 that they have reached a budget agreement and will now negotiate with Governor Gavin Newsom over differences between their $267.1 billion plan and the $267.8 billion budget proposed by the governor. The legislative budget largely mirrors the governor’s plan and proposes $196.1 billion in general fund spending, compared to $196.8 billion in Newsom’s proposal. Both plans represent significant increases from the $165.2 billion in general fund spending in the budget approved last summer, and…

State revenue for the first nine months of the current fiscal year is $16.7 billion ahead of the projections in Governor Gavin Newsom’s January budget proposal, the Department of Finance announced April 23. In March alone, the state collected $2.3 billion more than the $8.9 billion the governor had predicted for the month. The governor’s budget, which will be updated in mid-May, anticipated revenue of $120.5 billion in the first nine months of 2020-21. “A significant amount of receipts above…

California’s voter-approved state spending limit – which requires the state to return money to taxpayers and dedicate more money to schools if revenue is above a prescribed limit over two consecutive years – will be a “major issue” in the budget process beginning this year, the Legislative Analyst’s Office (LAO) reported April 21. The report is an indication that any tax increases approved by the Legislature and governor would not go into the general fund, but would have to be…

Governor Gavin Newsom signed several budget bills February 23 after the Legislature fast-tracked measures that Newsom said are needed immediately to help Californians affected by the pandemic. “This critical assistance – including child care, relief for small business owners, direct cash support to individuals and households, financial aid for community college students and more – will help keep our communities afloat as the state continues to confront the immense challenges of this moment,” Newsom said in a press release announcing…

Governor Gavin Newsom and Democratic legislative leaders announced February 17 that they have reached an agreement on portions of the state budget intended to help Californians who have been affected by the pandemic. The stimulus package includes $9.6 billion in budget changes – spending increases and relief measures – including $4.7 billion directed to small businesses, according to Senator Nancy Skinner, chair of the Senate Budget and Fiscal Review Committee. The deal – negotiated behind closed doors and not discussed…

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…

Governor Gavin Newsom this morning unveiled a $227.2 billion state budget proposal – roughly $25 billion higher than the budget enacted last summer – that continues the business tax increases approved in last year’s budget. The Department of Finance acknowledged revenue forecast mistakes in the 2020-21 budget, with the director of the department telling reporters: “We got it wrong.” Last year’s AB 85 (Assembly Budget Committee), which the department said was critical to closing a budget shortfall that is now…