Latest Cash Report

The latest state controller's cash report for the first five months of the 2015-16 fiscal year is out. It shows more cash has arrived as revenue than was forecast back when the budget was enacted. That's the good news. It is also not entirely a surprise since Gov. Brown tends to push the legislature to use conservative revenue forecasts in order to hold back spending.

When you look at the three big taxes, however, it appears that only the highly progressive personal income tax is running ahead of forecast values. The sales tax and the corporate tax are below forecast levels. That result suggests that good things are happening to incomes of those at the top of the income distribution (whose payments drive the income tax) but not so much for the rest. Note that even in a period when the stock market has not been shooting up, it is possible for capital gains revenue to come in based on earlier appreciation.

You can find the cash report at http://sco.ca.gov/Files-ARD/CASH/05_November_2015.pdf

Soft Spot in State Receipts

The latest cash report from the state controller continues to show a soft spot in state fiscal affairs. State general fund revenues through January are up about 11% over the same period last year, which is good news for the budget.  But the increase is concentrated in income taxes (very sensitive to financial market gains and to the income variations of the upper bracket taxpayers). Income taxes were up 12%. Corporate profits tax receipts were up over 47%. 

Sales tax receipts, which reflect consumption of more ordinary folks, were up only around 2%. The cash report indicates there was an accident of timing that understated normal sales tax revenues. But even adjusting for that event will give you an estimate of under 5%. With population gains of around 1% and inflation around 2%, that number produces a real per capita gain of around 2% - not terrible - but not a booming result either. Although there is nothing on the immediate horizon in the way of bad economic news, we remain in a position where any economic setback could upset the state budget situation.

Something to Do on Your "Day Off" - The California Economy

ROTC installed on UCLA's old Vermont Avenue campus in 1920

Yesterday, we noted that UCLA is closed for Veterans’ Day today (Monday) even though Veterans’ Day was on Sunday.  We also noted some not-so-positive history as to why there is no instruction today on UC campuses even though it reduces class time and generally is harmful to the academic endeavor.  And we noted that private universities such as USC and CalTech find it worthwhile to continue instruction today, unlike UC.

But since you do have a “day off,” albeit thanks to some prior unwise decisions by UCOP, we offer some education on the current state of the California economy, courtesy of yours truly – assuming you have an extra 63 minutes to spare.  Alternative links are provided below:

Link with slow download or set-up, particular with slower Internet connections (but sharper image than the alternative).

Also directly at http://archive.org/details/CaliforniaTheGoldenState

Lower quality (faster loading version) in four parts – with the PowerPoint slides not as legible as at the link above - at:

Part 1:

Part 2:

Part 3:

Part 4: