The state controller released his January cash statement for the state. For the first seven months of the fiscal year, revenues are running over $4 billion ahead of what was anticipated in the original budget. More than all of this amount is coming from the personal income tax. I say more than all because sales tax has come in below forecast – suggesting that the underlying economy is not booming. So why the jump in income tax revenue? It may be that because of the fiscal cliff, etc., wealthy folks – who account disproportionately for the income tax – did things such as take capital gains before January 1. So we could have a one-time windfall. If so, there may be less of a take from capital gains in the future. January is a month in which quarterly estimated tax is due – which again is likely to reflect wealthy folks who pay in quarterly. I have not seen an explanation as to why such folks might make bigger payments than forecast – unless it is a taking of capital gains in 2012. The basic reality here is that no one knows.
It might be of interest to note that UC so far has gotten about $900 million from the state which is less than 7/12 of what we are due. So the state is still tending to pay us later rather than sooner and leaving it to UC to go get any needed financing.
You can see the controller’s statement at:
Anyway, as the song says: