State Revenues Below Estimates for October, Fiscal Year
November 17, 2016
Revenues for the month of October fell behind estimates by almost 5% compared to the adopted 2016-17 Budget with biggest shortfalls in the personal income taxes and sales and use taxes. Preliminary General Fund cash for October was $381 million below the forecasted $8.1 billion. Year-to-date revenues are approximately 1.8% below estimates. The full report from the Department of Finance shows mixed news for other statewide economic indicators such as unemployment, home sales, and construction activity.
Sales and use taxes showed another below-projection month with year to date revenues falling $361 million below the forecast and October showing a dramatic drop of over 13% in this last payment period for third quarter taxable sales. Retailers often report a slowing of activity in the weeks leading into a presidential election, which may account for a small portion of the drop in sales tax revenues.
While corporate taxes exceeded projections, personal income taxes were approximately 4.5% under, or $236 million. For Prop 63 allocations this means that the amount transferred to the Mental Health Services Fund was $4 million below the forecasted $94 million. Year to date collections are also not strong. Those are now $29 million below the forecast.
Reports from the last four months of the fiscal year do not necessarily indicate a long-term trend but it will certainly be noticed in the Governor’s January Budget for 2017-18, which is due no later than January 10, 2017, to the Legislature.