State Cash Report

We noted on Saturday that the Legislative Analyst's Office (LAO) was projecting state budget problems due to less tax revenue arriving than projected. We also said that the controller would be reporting on cash receipts through November this week. 

Actually, the controller's report came out earlier than usual. But it shows numbers also indicative of a problem. Through November (when delayed taxes for 2022 were due for most taxpayers), the state turned out to have overestimated tax receipts by over $24 billion. Nineteen billion of that overestimate was from personal income taxes. Sales tax receipts were slightly underestimated, which suggests that the revenue problem was more from financial markets - capital gains and losses - than from the real side of the economy. But there is some slowing, since sales tax receipts are below what they were at the same time last fiscal year.   

As the chart below shows, the calendar year 2022 was a time of general stock market decline. There was some offsetting appreciation in 2023, but we are roughly back to the peak of 2022.

The state still has over $90 billion in unused borrowable resources so there is room for internal borrowing before it becomes necessary to borrow from outside markets. Nonetheless, the compact UC has with the state could come under strain.

The November controller's report is at https://www.sco.ca.gov/Files-ARD/CASH/November2023StatementofGeneralFundCashReceiptsandDisbursements.pdf.

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