California tax revenues crush expectations for January

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California’s total tax revenues of $17.35 billion for January beat the governor’s 2018-19 proposed budget estimates by $2.37 billion, or 15.8%, according to the state controller’s monthly report.

For the first seven months of the fiscal year, state revenues at $74.56 billion came in 4% higher than anticipated in the governor’s January budget proposal and 11.7% higher than the same period a year earlier.

Personal income taxes and corporation tax collections in January exceeded the 2018 governor's budget estimates by 16.9% and 62.1%.

For the fiscal year to date, personal income taxes and corporation taxes exceeded the 2018 Governor’s Budget estimates by only 4.9% and 8.5%, according to State Controller Betty Yee's spokeswoman.

“The year is off to a strong start revenue-wise but I would caution that one strong month does not indicate an enduring economic boom,” Yee said in an emailed comment. “While January’s personal income and corporation tax revenues were certainly higher than expected on a monthly basis, over the longer term, the year-to-date totals are coming in just slightly above expectations.”
Personal income taxes and corporation taxes, two of the three largest sources of general fund dollars exceeded estimates for the second consecutive month and are both surpassing assumptions for the fiscal year. The 62.1% jump in corporation taxes, which came in $211.2 million higher than anticipated at $552.6 million, was partly because refunds were $38 million lower than expected, according to the controller’s office.

The jump in personal income and corporate taxes offset sales tax receipts that were 12% less than anticipated coming in at $1.01 billion, which was $138 million lower than expected. Sales tax receipts are also lower than anticipated for the fiscal year coming in $151.2 million lower than the $13.03 billion projected.

Unused borrowable resources through January exceeded projections by $7.83 billion, or 30.8%.

Outstanding loans of $5.64 billion were $5.19 billion, or 47.9%, less than the 2018-19 proposed budget estimates and $5.02 billion, or 47.1%, less than the 2017-18 Budget Act assumed the state would need by the end of January. The loans were financed entirely by borrowing from internal state funds.

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