State Revenues Dip Below Budget Estimates
Aug. 16, 2018
With total state revenues missing Budget Act estimates for July by $178 million (or 2.4 percent ), Fiscal Year 2018-19 is unfortunately off to a lackluster start. As shown on the latest Department of Finance (DOF) cash flow report, $480 million in unrealized sales and use tax is the primary reason for the shortfall. However, DOF maintains this could be due to receipts expected in July being shifted into August.
In addition to sales and use tax, corporation tax also fell short of budget expectations for the month of July. Total receipts of $347 million were $17 million (or 4.7 percent) less than expected.
On the positive side, income taxes continue to exceed budget expectations for the fifth month in a row. In July, total income tax receipts were $249 million (or 5.1 percent) higher than expected. That translates to an extra $4 million in the Mental Health Services Fund, bringing the total up to $92 million.
Labor markets conditions also remain strong with California’s unemployment rate at a record low of 4.2 percent. While building permits continue to increase, home sales have dropped substantially since this time last year. The median home price is at a record high of $602,760.