The latest cash update from State Controller John Chiang did have some good news: the state’s revenues during the month of November were $497.7 million above projections outlined in the state budget. That being said, Chiang was quick to point out that total year-to-date general fund revenues are still behind the budget's estimates by $1 billion.
The Controller commented the following: “While November's totals came in 9 percent above projections, they did not erase the fact that we are still running $1 billion behind in revenues and $2 billion ahead in expenditures. Regardless of whether midyear cuts are enacted next week, the Legislature faces a tremendous fiscal challenge when it returns to session next month."
The combined current year cash deficit stands at $21.5 billion and the State ended last fiscal year with a cash deficit of $8.2 billion. For the month of November, it was primarily income tax revenues that helped boost revenues above projections, as the state took in $531.4 million, or 19.6 percent, more than expected.
Read the Controller’s November financial statement here. Summary analysis can be found here.
You’ll recall that budget figures are particularly important this December because the Department of Finance will release its report to determine how much the state has to cut. The Bee reports on the following important point about November’s figures:
“The Legislative Analyst Office's Jason Sisney said the strong November income tax figures were largely due to fewer refunds paid out rather than improvements in the economy. If so, the November total doesn't necessarily foretell greater revenue for California through the rest of the fiscal year, which means the state may still be on track for a significant round of midyear cuts.”
In other budget news, while midyear cuts appear likely, the state could face another round of automatic cuts if the governor doesn’t get his way, according to the administration. Brown recently launched an initiative that would raise taxes and the governor has said if voters reject it, then the state should prepare for even more cuts to address the shortfall. The governor commented, “We’re going to balance the budget. We’ll propose cuts and the taxes, and if the taxes don’t materialize, I will propose we have trigger cuts that go into effect immediately.”
Republicans have criticized the governor’s threat and suggested he is holding taxpayers hostage.