State Controller John Chiang’s latest cash update on the state’s finances didn’t exactly bring good news to the table. The latest receipts are merely fueling criticism that the newly-approved budget relies on projections that are far too rosy for our current economic realities, and the 10.3% over-assumption in the budget could lead to even deeper cuts. As it stands, the latest receipts show that revenues were down $538.8 million (-10.3 percent) below projections from the recently passed state budget. In order to prevent the so-called trigger cuts, there isn’t exactly a whole lot of time for the state to make up the difference. John Myers from KQED points out that “If revenues are off by more than $1 billion, the package of cuts totals $601 million. Funding for UC, CSU, state developmental and in-home supportive services would be each cut by an additional $100 million.”
Notably, sales taxes were down $139.4 million (-12.5 percent), and corporate taxes were down $69.5 million (-19.3 percent) during the month of July; however, income taxes were above projections by $89 million (2.9 percent). The controller commented the following about the latest cash update:
“While July's revenues performed remarkably similar to last year's, they still did not meet the budget's projections. While we hope for better news in the months ahead, every drop in revenues puts us closer to the drastic trigger cuts that could be imposed next year."
As mentioned, these “trigger” cuts will go into effect if revenues continue to be off budget projections, which means that millions and millions in deeper cuts would impact higher education, social services, MediCal, and various other programs.
You can view the month of July’s financial statement here.
A summary analysis can be found here.