California Revenues Failing To Meet Expectations
Sacramento, CA — Difficult decisions could be on the horizon for California lawmakers based on early revenues this budget year.
State tax collections have fallen below expectations for four straight months. The state’s non-partisan Legislative Analyst’s Office reports that there is an 80% chance that the state will be $8-billion short when the fiscal year ends on June 30.
Over the past couple of years, the state has seen record surpluses, leading to free-flowing money spent on new programs and initiatives. They include expanding kindergarten to four-year-olds, additional people eligible for free healthcare, and $21-billion worth of taxpayer stimulus checks.
Governor Gavin Newsom responded to the new projections by stating that he is working with lawmakers to make adjustments.
California is better suited to meet an economic downturn than the recession of 2008 thanks to increased reserve funds. The Associated Press reports that California had around $8-billion available to spend in September of 2008, and the number is now closer to $130-billion.
State officials cite the declining stock market as a big reason for the declining revenues, notably from Silicon Valley tech companies, which saw growth during the pandemic, but are now seeing stock prices fall. The state’s top 1% of earners pay an estimated 50% of the state’s income taxes.
