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Thursday, November 7, 2024

More State Income Tax Revenue (but obligated) aka Good News/Bad News

 

An email alert from the Legislative Analyst's Office (Jason Sisney) reports more income tax revenue than forecast for the current fiscal year through October. The income tax is the largest single source of revenue for the state:

Preliminary data from California’s tax agencies shows that personal and corporate income taxes, combined, outpaced 2024 state budget projections for the month of October by $1.2 billion (16%). For the 2024-25 fiscal year to date, the income taxes are running $5.2 billion (15%) above budget projections. (In addition, 2023-24 General Fund revenue receipts were $3.2 billion above 2024 state budget projections.)

The vast majority of the revenue overage to date is already spoken for in the state budget—for example, to address:

  • school funding obligations (including maintenance factor accumulated due to the suspension of the Proposition 98 guarantee in 2023-24)

  • costs from new ballot measures approved by voters

  • costs due to savings efforts in the 2024 budget that fail to materialize

  • future unfunded costs shown as operating deficits in the 2024 budget multiyear budget projection from the Department of Finance.

Moreover, the upcoming changes in the federal executive and legislative branches obviously may result in changes to programs that affect the state budget. In addition, the Governor recently proposed a significant expansion of the film and television tax credit.

Later this month, the Department of Finance’s Finance Bulletin will include authoritative information on October revenues, including income, sales, and other taxes...

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