Tax collections for April alone are running about $2 billion shy of the Brown administration’s fiscal forecast, and by the end of the fiscal year in June that gap could widen further, according to the Legislature’s nonpartisan budget adviser.
The Legislative Analyst, in an update released late Wednesday, noted that “if the current trends hold, they suggest that the state's revenues could be a few billion dollars below the administration's January forecast in both (budget years) 2011-12 and 2012-13.”
April is a critical month for tax collections. April 15 is the income tax-filing deadline, and the state budget for the new fiscal year that begins on July 1 typically is revised in May to reflect the latest revenue numbers.
The administration had estimated that the Franchise Tax Board would collect some $6.35 billion in April, but as of April 25 the FTB had collected about $4 billion, according to the LAO.
“If this year’s final three collection days mirror the last three such days in April 2011, the state would end April with about $4.3 billion of FTB net collections — about $2 billion short of the administration’s projection for the month,” the LAO said.
The state’s collection of withholding payments also is falling short, perhaps by some $250 million.
But it is the less-than-expected revenues from the state income tax that are posing the biggest budget risk.
“As of the beginning of the month, PIT (personal income tax) for the fiscal year to date was already running $807 million below the administration’s projections,” the LAO reported. “Thus, as of the end of April, PIT results are likely to be around $3 billion below the administration’s forecast for 2011-12.”
Corporation taxes, meanwhile, thus far total $1.25 billion, shy of the administration’s target of $1.53 billion. If last year’s trend holds through the end of the month, April alone is likely to wind up about $150 million shy – a “very large shortfall that could approach 10 percent of the projected monthly total.”
Corporation tax collections from the beginning of the year through the end of April were running more than $300 million below projections. Thus, they may wind up “about $450 million below the administration’s forecast.”
Despite the lackluster revenue picture, it’s not possible yet to say what the impact will be on the biggest user of state funds, the schools.
“Changes in revenues also affect the state’s Proposition 98 minimum guarantee, for example,” the LAO reported.
Also, the early estimates in the original budget draft “did not anticipate the likely revenue effects of an initial public offering of stock by Facebook, nor the governor's revised tax measure. In addition, examination of more detailed FTB data from April will be necessary to make solid judgments about likely collection and tax refund trends in May and June 2012.”