What does $1 Billion of Missing April Revenue Mean for May?
May 5, 2016
As reported last week, April is a critical month for state revenue collections. The LAO released preliminary totals and analysis, which includes some bad news. Personal income tax revenue, which makes up almost two-thirds of the state’s General Fund revenues, came in about $1 billion below projections for the month and that represents a decrease of 2.6 percent when compared to April 2015 collections.
While it is too early to fully explain the lower than expected totals, some of the explanation appears to be due to slower growth in withholding amounts. The stock market drop earlier this year may also explain part of the decrease. Shortfalls are evident in both the 2015 calendar year returns and the 2016 quarterly prepayments made by high-income earners.
The news is not all negative. Corporate taxes clocked in about $50 million above projections for the month. (Data for April sales taxes, the other major source of General Fund revenue, is not yet available.) Additionally, the state’s strong budget position and automatic fiscal triggers and calculations will prevent any catastrophic budget deficit. Though April collections are especially important, these numbers will fit into the bigger 2015-16 fiscal year picture and the rest of the year will provide additional information about the state’s fiscal condition.
Next week, the Governor will release the May Revise, which will reflect these new numbers as well as other legislative changes that have occurred since the January budget release. CSAC will continue to provide information regarding how the state budget may impact counties.