Home News California Fiscal Issues and Information page California Fiscal Focus Summary Analysis of General Fund Cash Receipts (2007 - 2014) August 2014 Cash Report Summary Analysis Bottom Line: What the Numbers Mean | Receipts | Disbursements

Bottom Line: What the Numbers Mean | Receipts | Disbursements

Published August 11, 2014

California began the new fiscal year with a solid report as revenues exceeded projections, while spending was less than anticipated. As a result, borrowing needs were significantly less in July than had been estimated.

At $5.4 billion, July's total revenues exceeded estimates in the FY 2014-15 Budget Act by $232 million, or 4.5 percent.

All three of California’s major revenue drivers beat forecasts. Personal income taxes, the State’s primary revenue source, outperformed expectations by $245 million, or 6.4 percent. Withholding was considerably higher than projected as California’s employment and payrolls continued to expand. In June, nonfarm employment in the state finally recovered all of the jobs lost since July 2007 and moved to an all-time high. (See California Job Tracker column.)

Corporate taxes recently have tended to do better than anticipated against projections. In July, they beat estimates by $38 million, or 13.5 percent. Retail sales have recently been the weak link in California’s revenue stream, but perked up in July. They bested projections by $36 million, or 4.1 percent. The result of these positive variances was that the sum of the “Big 3” revenue engines surpassed estimates by $319 million, or 6.4 percent. (See Figure 1.) Adding in various other additions to the State’s coffers, ranging from taxes on alcohol to funds from the federal government, total General Fund receipts were $363 million, or 7 percent, ahead of estimates for the first month of Fiscal Year 2014-15. (See Table 1.)

On the spending side, total disbursements were $1.1 billion less than projected for July. The cost of State operations was $134 million, or about 5 percent, less than estimated, while funding for local governments was $943 million, or 7 percent, less than projected. Despite a large increase from last year, funding for K-12 schools was shy of estimates made for the month. (See Table 2.)

With $363 million more revenue than anticipated and $1.1 billion less of spending, California’s July borrowing requirement of $7.9 billion was $1.5 billion under the budgeted amount. It also was down from the $8.5 billion of borrowing last year and was met entirely through borrowing from internal funds.

Caution should be noted regarding July’s favorable results. The month is not a major source of the State’s total revenue take for the fiscal year. Last year, for example, total General Fund revenues accounted for less than 5.0 percent of the sum collected for the full year. Spending patterns can also be volatile. Nevertheless, the results are good news and underscore California’s ability to strengthen its financial position if the economy retains its economic momentum and policymakers are disciplined on the spending side.

Figure 1: California Begins FY 2014-15 Favorably

July 1-July 31, 2014, Variance from Budget Act (Percent)

Table 1: General Fund Receipts

July 1, 2014 – July 31, 2014 (in Millions)

Table 2: General Fund Disbursements

July 1, 2014 – July 31, 2014 (in Millions)

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