California's February revenues beat projections by nearly $4 billion

California’s general fund revenues are running $14.3 billion above January’s forecast for fiscal 2021 to 2022, providing a better-than-anticipated outlook.

Cash receipts for February exceeded the month’s projections by $3.8 billion, according to the state's Department of Finance.

“California’s improving revenue picture is another sign of the growing light at the end of the tunnel as we recover and rebuild from the pandemic,” Gov. Gavin Newsom said in a statement.

Bloomberg News

The gains come on top of a $15 billion budget surplus state officials had reported earlier in the year. Expecting a much steeper economic downturn, lawmakers had made cuts to schools and state worker salaries to balance the budget last year.

Lawmakers in February approved using a significant portion of that surplus revenue to provide $600 payments to low-income residents and for $2 billion of grants to businesses hurt by the pandemic.

“In partnership with the Legislature, we’ve ensured much of these revenue gains are providing immediate relief for individuals and families through the Golden State Stimulus, and for struggling small businesses through a more than $2 billion boost to our investment in relief grants," Newsom said.

Part of the February boost resulted from a lower level of state tax refunds tied to the delayed federal start to the tax filing season, and from lower refunds, because the governor’s budget anticipated the stimulus would be approved and dispersed sooner, according to the governor's office. The Internal Revenue Service postponed the deadline for filing taxes in 2020 from April 15 to July, and just announced plans to delay filing deadlines for this year to May 17.

Refunds issued in February were $2.2 billion below the expected $4.7 billion, according to the state Department of Finance’s cash report.

Sales tax receipts beat budget projections for the fiscal year by $760 million, while corporate tax receipts came in $721 million ahead of projections and personal income tax bested expectations by $12.8 billion.

Last year’s state budget analysis was also created with less revenue information, because of the extended tax deadlines.

The governor announced last week he will propose additional money for business relief during his annual May budget revisions to his fiscal 2021-22 budget proposal. The Legislature must approve a budget by the end of June.

In January, Newsom had described the state’s budget future as tenuous and his office anticipated deficits in out years despite the unexpected windfall.

The state posted a 9% unemployment rate in January, more than double the 4.3% pre-pandemic level of February 2020.