State Budget Data Through November Continue Stronger-Than-Projected Trend

We noted in an earlier post today that when you look at the labor market in California, things do not look rosy. However, as we have also been noting, the state budget outlook is outdoing projections made when the current budget (for 2020-21) was enacted last June.

We have also noted the discrepancy between Dept. of Finance reports on revenue received and reports of the state controller. Although the discrepancy is officially explained by timing of recording of receipts, there appear to be some questions as to whether that is the whole story.

In any case, in general terms, both sources are reporting the same thing: lots more revenue arrived during July-through-November than had been forecast. The "extra" revenue is about $12.5 billion according to the controller and about $13.8 billion according to the Dept. of Finance. Most of the extra revenue is from the personal income tax. The  personal income tax accounts for almost 7 out of 10 dollars of state tax revenue. And it is highly dependents on upper-income taxpayers who have been less adversely affected than others.

The controller is reporting that as of the end of November, the state had accumulated "unused borrowable reserves" of over $43 billion, almost $12 billion more than had been anticipated. During the prior fiscal year through November (pre-coronavirus), such reserves were less than $36 billion. 

The bottom line is that despite the fact that more aid to the state from the federal government seems unlikely, UC should not be shy about asking the legislature and governor for "more" in budget requests for fiscal 2021-22.

Numbers from the controller are at: https://sco.ca.gov/Files-ARD/CASH/November2020StatementofGeneralFundCashReceiptsandDisbursementsFinal.pdf 

Dept. of Finance numbers via the Legislative Analyst's Office (LAO) are at:

https://lao.ca.gov/LAOEconTax/Article/Detail/598