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

Bottom Line: What the Numbers Mean | Receipts | Disbursements

Published September 9, 2014

California’s August numbers contained several unique elements, which means more effort is needed to scrape away some of the confusion of the headlines. When that is done, it appears that the State’s fiscal position remains on the mend although it is very early in the fiscal year.

The headline shows that August revenues were $370 million, or 5.3 percent, below Department of Finance projections made in conjunction with the 2014-15 Budget Act. However, a one-time transfer in August of $343 million in sales taxes from the General Fund to local governments was equal to almost the entire shortfall. An audit revealed that more sales tax revenues should have previously been given to local governments for Public Safety and Local Revenue Realignment. That discrepancy was addressed by the August transfer. Without that transfer, total revenues would have been almost equal to August projections (off by just 0.4 percent) and above year-ago actuals by 1.3 percent.

On the spending side, disbursements in August were $464 million, or 5.9 percent, below projections. Spending on schools, disability and other social services, and health care all were under projections. The cost of State operations was higher than estimates. It should be noted that while spending on health care at the local government level is running below estimates, this is being offset by a larger overage at the State level. Health care outlays will be an area that demands close monitoring.

Looking at the total fiscal-year-to-date, California has a fairly good report card. Even with the August transfer of retail sales taxes, total receipts were essentially equal to forecasts at $12.3 billion. (See Table 1.) Total disbursements were $22.7 billion, which were about $1.6 billion below estimates. (See Table 2.) As a result, the difference between receipts and expenditures so far in Fiscal Year 2014-15 was also $1.6 billion below expectations, as was the amount of borrowing.

At the end of August, California had an outstanding loan balance of $8.5 billion because of the typical timing shortfall of revenues versus disbursements at this time of year. This was less than the $10.1 billion forecast by the Department of Finance and the $12.4 billion of a year ago. (See Figure 1.)

California's economy continues to grow, which is supporting revenues, while spending is holding to budget confines. Consumer spending in terms of retail sales taxes has been disappointing and will need to be closely monitored. Expenditures from month to month can be volatile and will also need to be watched, especially since implementation costs of the Affordable Care Act are adding another source of uncertainty into the spending outlook.

On balance, California has ended the summer on a relatively upbeat note, but nothing is assured as we approach the fall and winter months.

Figure 1: Borrowing Needs Decline

July 1 – August 31, 2014 (Billions of Dollars)

* Department of Finance

Table 1: General Fund Receipts

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

Table 2: General Fund Disbursements

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

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