I have (some) Good News but (more) Bad News about the state budget

The general fund cash statement for July 2020 is now available from the state controller. July wouldn't ordinarily be an important month for the budget but this time it is because, given the coronavirus crisis, the state moved the due date for corporation and personal income taxes from April 2020 to July 2020. 

So let's take a look at the table below:

                           Actual  Estimated       Actual
$billions               July 2020  July 2020    July 2019
---------------------------------------------------------------
Corporation tax              $4.5       $4.8         $0.5  
Personal income tax          23.8       21.2          6.3
Sales tax                     1.3        2.0          2.3
---------------------------------------------------------------
All revenues                 29.9       28.3          9.4
---------------------------------------------------------------

As the table shows, actual revenue from the two deferred taxes (corporation and personal income) were well above what was collected in July 2019, a normal year. A more important piece of information comes from the comparison of actual July 2020 revenue with what was estimated to come in as part of the state budget for 2020-21 enacted in June 2020. Note that the two deferred taxes reflect tax year 2019, i.e., before the coronavirus crisis. So their importance to the budget is just whether the estimate for July 2020 was too pessimistic. The corporation tax collected less than was expected but the personal income tax collected more, enough to more-than-offset the underestimate for the corporate tax. Thus, for all July 2020 revenues (which includes other minor taxes and other miscellaneous sources of revenue), there was an underestimate. That's the good news.

On the other hand, the actual sales tax for July 2020 is the bearer of bad news. Sales tax is a rough proxy for consumption behavior and it was (way) down compared with either July 2019 or the estimate made for July 2020. That drop is telling us that economic activity in July was depressed to a level significantly below what it was last year and even below what it was forecast only a month before.

Source of data: https://sco.ca.gov/Files-ARD/CASH/July2020StatementofGeneralFundCashReceiptsandDisbursements.pdf