Gov's May Revise Set to Come Out

The Governor's May Revise is set to come out next week (which means it probably gets leaked any minute), and counties better buckle up. The states Legislative Analyst (LAO) is reporting that collections are failing to meet estimates by nearly $1 billion.

The Governor's original budget form January called $122 Billion in spending, and was overall conservative. As reported in the SF Examiner this week, "Instead, warning that a recession may be imminent, Brown urged spending the surplus revenue to rehab state buildings and pre-fund employee retirement benefits — costs that can more easily be curtailed if revenue plummets. He also wanted to set aside an extra $2 billion in a rainy-day fund."

Well, there might be some belt tightening coming. Here's some details form the LAO release sent last week.

• As of the end of March, California General Fund revenues were running $287 million above 2015-16 year-to-date projections.
• California's personal income tax (PIT) collections for the key month of April were about $1 billion below projections, as shown above. Net PIT collections in April 2016 were projected to be up 4.6% compared to April 2015, but they ended up down by 2.8% instead (as shown in the figure at the end of this post).
• Corporate taxes in April ended at $61 million above the administration's monthly projections. Sales tax totals for the month should be available in a few days.
• Most of the April shortfall resulted from 2015 personal income taxes being lower than the administration's projections. 2016 tax payments (including withholding payments from paychecks) were also lower than those projections.
• Both our office and the administration will release new budget projections later this month. The new projections will include updated economic and revenue projections, as well as updated spending estimates.