SAN FRANCISCO — Despite recent state budget revisions that incorporated weaker revenue forecasts, California general fund revenue was even lower than expected in August, said Controller John Chiang.
Total general fund revenue was down $237 million from estimates in the amended budget, which was adopted July 28, according to Chiang’s monthly cash report, released Thursday.
The shortfall will have no material impact on the state’s cash position and its ability to issue between $7.8 billion and $10.5 billion of revenue anticipation notes, Chiang said in a statement, because his office’s stress-testing of the budget anticipated some revenue shortfalls.
“While those revenues can be made up in the months ahead, I am concerned that they constitute nearly one-half of the state’s $500 million budget reserve,” he said. “What is more troubling to me is that consumer activity and unemployment continue to be a drag on California’s recovery.”
The state’s contracting economy, and the related contraction of state tax revenue, put California in a cash squeeze that forced it to issue $2.6 billion of IOUs to many creditors between July 2 and Sept. 4. It is now redeeming the IOUs, with the help of a $1.5 billion revenue anticipation note issue that was privately placed with JPMorgan, which will manage the public Ran sale the week of Sept. 21.
According to the controller’s office, corporate taxes came in $27.3 million above projections.
But personal income taxes were $247 million below budget estimates and sales taxes were down $185 million.
According to the summary analysis from controller’s office, the figures in the cash statement are distorted by IOUs issued for personal income and corporate tax refunds, and the final $237 million shortfall was determined after adjusting receipts and disbursements to account for those distortions.
The decline in sales tax would probably have been even worse, the controller’s office said, were it not for the temporary boost to car sales driven by the expired federal “Cash for Clunkers” program.