Not Out of the Woods: Controller Emphasizes Importance of June Revenue in May Cash Update
State Controller John Chiang hyped the importance of June’s state revenues in his latest cash update by commenting that “June revenues are the ones to watch. The last month of the fiscal year is now the biggest, and will signal how well the 2012-13 budget gets out of the gate.” While revenue was $83.5 million above budget estimates in May, "the General Fund is not out of the woods," according to Chiang.
Personal income taxes fell $14 million below (-0.5 percent) projections, with sales taxes also falling $106.3 million (-3.7 percent). Corporate taxes also were down, coming in $2.7 million (-9.3 percent) below projections. These were offset by increases in other tax sources, namely insurance taxes. Chiang commented that “Most of the increase over expectations in May owes to strong growth in the insurance tax, which is a tax on gross premiums, which was up $130.6 million relative to the estimates for the month.”
Friday is the deadline for legislators to pass a state budget and they have a $15.7 billion deficit to tackle. The Bee has reported that lawmakers are busy huddling this week and “legislative leaders started negotiations this month and are about $2 billion apart from the Democratic governor, with differences largely having to do with cuts to welfare-to-work, child care, in-home care and Cal Grants.”
Commenting on the task that lies before lawmakers, the Controller had some advice, as he wrote, “Sacramentans can expect 450 hours of daylight during June, more than any other month. The Legislature may use the long days reviewing reductions for 2012-13."
Read May’s financial statement here.
Summary analysis is available here.
Update: Democrat lawmakers have released their own budget plan with smaller cuts. Check out the details here.