April 17, 2013: The Legislative Analyst's Office reports that today -- as was yesterday a "huge tax collection day" for California.
Today's $2.9 billion of Franchise Tax Board (FTB) collections of California personal income taxes (PIT) significantly exceeded the $2.6 billion total reported yesterday. With month-to-date PIT collections, net of refunds, now approaching the $9 billion mark, California has surpassed the $8.5 billion total for the month that was necessary to remain on track with the administration's most recent revenue estimates. It is difficult to predict what will occur between now and April 30, but, based on recent years' results, collection of another $2 billion or more in PIT revenue during the rest of the month seems quite possible.
Looking Ahead... Assuming that PIT revenues continue on the current track for the rest of April, next month's updated revenue forecasts from the administration and our office will have to make difficult judgments--based on limited data--about how much of the 2012-13 revenue gain results from previously unanticipated growth in taxable income and how much results from taxable income "accelerated" from future years to 2012 in order to benefit from lower federal tax rates then in effect. These forecasts will affect the Proposition 98 minimum funding guarantee for schools and community colleges, as well as the overall state budget situation for 2013-14. As we discussed in January, to the extent that 2012-13 revenues are greater than expected, the additional revenues may be required to be allocated to Proposition 98, and this might limit substantially improvements to the state's financial bottom line that otherwise would result.