State Budget

California’s Tax Revenue Is $16.7 Billion Above Projections

California State Capitol 1

State revenue for the first nine months of the current fiscal year is $16.7 billion ahead of the projections in Governor Gavin Newsom’s January budget proposal, the Department of Finance announced April 23.

In March alone, the state collected $2.3 billion more than the $8.9 billion the governor had predicted for the month.

The governor’s budget, which will be updated in mid-May, anticipated revenue of $120.5 billion in the first nine months of 2020-21.

“A significant amount of receipts above the January forecast is due to lower refunds caused by a later-than-expected enactment date for the Golden State Stimulus, as well as a delayed opening date of the tax filing season by the Internal Revenue Service,” the Department of Finance stated.

For the first nine months of the fiscal year, personal income tax revenue was $14.4 billion above the forecast, sales and use tax was $943 million above forecast, and the corporation tax was $1.4 billion above forecast.

Adding to the state’s positive fiscal news, the Legislative Analyst’s Office reported that California income tax withholding collections in from April 1 to April 26 were 30.3 percent above the collections in the entire month of April last year. Through April 26, total withholding for 2020-21 was 12.2 percent above the same period in 2019-20.

“We caution against giving too much weight to withholding numbers in any given month, as they often include one-time payments (say, for taxes on stock options associated with initial public offerings) that are unlikely to recur,” the analyst wrote. “Nonetheless, monthly withholding payments provide a useful near-real-time indicator of the state’s evolving economic situation.”