California revenue billions of dollars above expectations

(The Center Square) – California’s coffers are filling with tax dollars at rates higher than what state officials expected.

The California Department of Finance released its October revenue data Tuesday, showing the state took in $11.4 billion. The total is more than $2 billion over what was predicted.

“Preliminary General Fund agency cash receipts for the entire 2020-21 fiscal year were $4.783 billion above the 2021-22 Budget Act forecast of $201.775 billion, or 2.4 percent above forecast,” the report said. “When this prior fiscal year-end amount is combined with the current fiscal year-to-date total, preliminary General Fund agency cash receipts are $15.978 billion above the 2021-22 Budget Act forecast.”

The glut of revenue is in addition to $4.8 billion in underestimated revenue from the previous fiscal year. In total, the report said the state’s revenues are now $16 billion above the Budget Act.

Largely reliant on the income of high-earners, California’s income tax revenue was the main driver of surprise income in October. The state brought in $8.5 billion, higher than expected by $1.4 billion.

Sales and use taxes, counted by cash receipts, were $30 million above the month’s forecast of $1.385 billion.

The nonpartisan Legislative Analyst’s Office released its annual fiscal outlook report Nov. 17, showing the state is on track to have a $31 billion surplus. Tax collections grew at an annual rate of 30% in the 12-month period ending in September, something the report said is the fastest rate in at least four decades.

Because of a 1979 voter initiative that caps state and local spending, the state Legislature must either lower tax revenues, issue tax rebates or spend the funds on things excluded from the appropriations limit.

Gov. Gavin Newsom didn’t expressly state in a news conference last week the state again would issue tax rebates as it did in the last enacted budget, but he did hint it could happen.

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