California tax revenue yields multibillion-dollar surplus
[bold] State coffers contain about $4.5 billion more than expected in personal income tax payments. Business taxes have also rebounded, signaling an economic recovery. [/bold]
SACRAMENTO — California has been flooded with revenue this tax season and is on track to finish the fiscal year with a surplus of billions of dollars, according to officials.
State coffers contain about $4.5 billion more than expected in personal income tax payments. Nearly $2.8 billion of it arrived April 17, the third-highest single-day collection in California history, according to government figures.
Business taxes have also rebounded and are likely to be $200 million ahead of projections.
Gov. Jerry Brown will reveal his latest spending plans this month. State law may require much of the surplus to go to schools and community colleges.
After years of budget cuts, and after voters approved Brown's tax hike in November, the pressure on the governor will be intense from lawmakers and advocates eager to restore money to programs that were sliced to close deficits. But Brown has already cautioned that there may not be much cash to spread around after education funding requirements are met.
"Depending upon how the money flows, it may not be as available as many people are now thinking," he said recently.
Brown, whose administration has projected that tax revenue will rise for the next four years, has also said he wants to use the opportunity to pay billions of dollars in debt. The tab for various borrowings during years of budget crisis is expected to be almost $28 billion by the end of June, according to state officials, and will take years to erase.
California relies heavily on income taxes to pay state bills. Last year, April taxes fell far short of expectations, widening the budget deficit. The new figures show a dramatic change in Sacramento's fortunes.
Assembly Budget Chairman Bob Blumenfield (D-Woodland Hills) said he's thrilled.
"We're not framing the debate around what to cut," he said. "We're making choices about what kind of investments we want to make."
The tax surplus is partly a sign that California's economy is on the mend, with housing prices on the rise and unemployment dropping. The stock market has also been climbing, pumping more money into the state treasury.
"It's almost certain that 2013 will be a very good year," said Steve Levy, director of the Center for Continuing Study of the California Economy in Palo Alto.
Brown's plan for raising taxes temporarily was intended as a "holding action" to keep state books balanced while the economy rebounds, Levy said. A strong recovery could help vindicate that approach. Brown's measure added a quarter-cent to the state sales tax for four years and increased income taxes on high earners for seven.
Meanwhile, lawmakers, state officials and financial experts have cautioned that the spike in revenue may not hold.
It's possible that Californians, fearing federal income tax hikes stemming from the budget standoff in Washington, cashed out investments late last year. Jerry Nickelsburg, senior economist at the UCLA Anderson School of Management, said federal statistics suggest many people did so.
"If you had a choice of taking income in January or December, and you will pay less taxes in December, why wouldn't you do that?" he said.
That could account for some of the current surplus — and state income could fail to keep pace in the next fiscal year, which begins July 1.
Chris Thornberg, a founding partner at Beacon Economics in Los Angeles, said he is concerned that lawmakers will use the spike in revenue as an excuse to abandon efforts to rein in public-worker benefits or stabilize the state's tax system. California's reliance on income taxes makes its finances somewhat unpredictable and has led to cycles of boom-and-bust budgeting.
"Maybe they will shock me and do the right thing," he said. "But I'm not holding my breath."
Well then, where the hell is my income tax refund? I've been waiting for six weeks!
Did you mail it, R1 or file electronically?
Now let's hope they use it to buy down debt, and invest smartly in the states future.
California has shown us the way...
If you want to fix your deficit and budget issues, simply get rid of Republicans. As soon as the Republicans have virtually no voice in government, all the problems seem to start going away!
r4 It also helps to have a governor like Brown who has made it his priority to get California finances in order without sacrificing funding to education -- something that Arnie was so willing to do.
Could this have anythingthing to do with so many illegals packing up and heading back south? You know you were thinking it.
r6 more like heading to Texas and North Dakota (for the oil boom)
No, R6, you're just dumber than a bag of rocks. I'm a CA resident and the thought didn't enter my mind. What I do know is that we have a Democrat for governor and a Democrat majority in the two CA legislative bodies which have made the tough choices that needed to be made without mortgaging the state's future for the benefit of short term private gain. In addition to that, we've got an informed electorate who's been willing to raise taxes on themselves.
[quote] California tax revenue yields multibillion-dollar surplus. State coffers contain about $4.5 billion more than expected in personal income tax payments. Business taxes have also rebounded, signaling an economic recovery.
Solution? PUT A DEMOCRAT IN OFFICE.
Republicans fuck up the economy each and every time. Period. And yet they don't get blamed for it.
Clinton, Obama, and Brown - ALL DEMOCRATS - had to step in and fix the problem.
This should be all the evidence you need, to never vote Republican again.
Thank you R9.
Did you idiots read the article at all? It's one thing to be partisan, but not dumb.
"Meanwhile, lawmakers, state officials and financial experts have cautioned that the spike in revenue may not hold.
It's possible that Californians, fearing federal income tax hikes stemming from the budget standoff in Washington, cashed out investments late last year. Jerry Nickelsburg, senior economist at the UCLA Anderson School of Management, said federal statistics suggest many people did so."
I wouldn't celebrate until we see more evidence of this. I hope it's true and maintains.
They OWE $889 billion. This is not going to be enough to pay down the debt of that state.
It's from that lovely "tax" Brown convinced the idiots to vote for "for the children". We are still steep in trouble. We have businesses leaving at record pace.
r14 care for a link to businesses that have actually left CA at a "record pace?"
I know that douchebag Rick Perry came here a few months ago trying to get businesses to move to TX. Then he went to Chicago to do the same thing.
I'm not who you're talking to, and IDK if it's a "record pace" but this comes from the WSJ, it's actually an interesting piece and here's who it says has left CA
[quote]Campbell Soup CPB -0.46% announced in September that it was closing its 65-year-old plant in Sacramento, which employed 700 workers, and shifting production to North Carolina, Ohio and Texas. Chevron CVX +0.54% is moving 800 technical positions—in other words, jobs that aren't physically stationed on California rigs—to Houston.
Non-manufacturing businesses are also moving or expanding operations where labor, land, energy and capital are cheaper. Comcast CMCSA -0.54% announced in the fall that it is moving 1,000 call-center jobs out of California because of the "high cost of doing business." Facebook, FB +0.46% eBay EBAY +1.63% and LegalZoom have opened up Texas offices in the past few years, while PayPal, Yelp and Maxwell Technologies MXWL -1.11% have pushed into Phoenix.
---I'll add that Apple is now opening a place in TX, & also one in Sacto, and Zappos which had been based in SF is in LV, NV as everyone knows now.
Businesses leave states all the time. I just want a link to r14's claim that businesses are leaving at a record pace.
Corporations aren't the largest employers. They don't make or break a state. It's the small businesses that really do matter r16.
Is CA's taxes too high? Yes. But in states that have no personal income tax like LA, TX and FL, there's high sales tax and property tax, and little social services and safety nets.
In TX, you have a fertilizer plant that has violated both state and federal laws for years and no one seems to care until it blew up. No oversight. No regulation.
Some of you in this thread seem almost giddy to see CA fail. Just move to TX, FL or to your libertarian paradise.
CA is my home and my family and friends live here. It's a wonderful state with great people.
r17 I'm just curious. Do you live in the Valley? And what is your income level?
And do you own a business or a home in CA?
I was born and raised in Southern California and I own two businesses here. I would not consider moving my business to another State just for a tax break, because I'm not a money loving cash whore who can be sold to the highest bidder. Once Prop 8 is tossed into the trash can and the last of the Republicans flee to Texas or whatever other backward state they prefer, California will be practically perfect
[quote]If you want to fix your deficit and budget issues, simply get rid of Republicans. As soon as the Republicans have virtually no voice in government, all the problems seem to start going away!