Ten Percent

According to the state controller, revenues for the first quarter of fiscal year 2025-26 ran ten percent above estimates made at the time the state budget was enacted.

Almost all of the overage came from the state's personal income tax. Sales tax came in more or less as anticipated.* So that suggests that the underlying economy was performing as expected, but that capital gains - and withholding reflecting those gains - was pushing up revenue.

The Legislative Analyst's Office (LAO) notes the discrepancy between forecast withholding and actual:

Source: https://lao.ca.gov/LAOEconTax/Article/Detail/756.

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Within that hypothesis is the possibility that AI enthusiasm is creating a financial boom reminiscent of the dot-com boom of the late 1990s (which also enhanced state revenue - until it suddenly didn't).**

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*https://sco.ca.gov/Files-ARD/CASH/September2025StatementofGeneralFundCashReceiptsandDisbursements.pdf.

**https://jasonsisney.substack.com/p/astonishing-september-tax-withholding.