Not Yet Out of the Woods on the State Budget

The latest cash statement from the state controller released today covers the fiscal year 2010-11 through May (11/12 of the year). It tells you what has actually happened so far this year as opposed to optimistic forecasts about next year.

Despite all of the hoopla about extra revenue, the statement indicates we are not out of the woods regarding the state budget. Relative to last year, sales tax revenue is up 1.7%, less than inflation in other words, which suggests a not-so-vibrant underlying retail economy. Overall revenue is up 7.6% over the same period last year and the gain is coming from personal income taxes. So it probably reflects capital gains in the stock market at the upper brackets rather than basic economic strength. Spending rose 5.1% relative to last year.

For the first 11 months of the fiscal year, the general fund ran a deficit of over $5 billion. That is what happened as opposed to bright forecasts for next year. The controller's report may be spun in different ways as part of the negotiations but these are the facts in contains.

You can find the report at http://sco.ca.gov/Files-ARD/CASH/may.pdf