We still have the extra dough, but…

Prior posts have noted the fact that around the beginning of this calendar year, an unanticipated $4+ billion arrived in personal income tax (PIT) receipts.  The reason is unclear but may have to do with high-end taxpayers anticipating some bump up in tax rates in 2013.  The issue then became whether the extra money was simply an advance that would dissipate or whether it would stick.  So far, it seems to be sticking.  However, the Legislature Analyst in a posting as of yesterday is cautious as you an see below.  The Analyst also notes that much of the extra funding is automatically earmarked for K-14 under Prop 98:

PIT on Track to End April Somewhere Around $4.5 Billion Above Year-to-Date Projections. Today is the first day that total reports of PIT collections, net of refunds, have been below $200 million since April 8. This suggests that the peak period of April PIT collections may have finally ended. As of this afternoon, month-to-date collections total $12.86 billion, net of refunds (all funds). As of now, our best estimate is that the state will end April with PIT collections for the fiscal year to date, as of that time, somewhere around $4.5 billion ahead of the administration’s estimates. As day-to-day collection trends can vary, this figure certainly is subject to change and could go down slightly if, for example, refund activity accelerates.


Effects on State’s Financial Bottom Line May Be Limited. As we have discussed since January, these additional revenues raise a number of challenging questions for next month’s updated budgetary forecasts, and the corresponding improvement to the state’s financial bottom line may be quite limited. This is because a large portion of the additional revenues may be required to be allocated to schools and community colleges… 
Source: http://lao.ca.gov/laoapp/budgetlist/PublicSearch.aspx?PolicyAreaNum=70&KeyCol=744&Yr=2013  [Note: This link may be updated, depending on when you click on it.]
Anyway, it all adds up:

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s