Bottom Line: What the Numbers Mean | Receipts | Disbursements

Published February 10, 2014

Total revenues in January 2014 were $387.7 million more than expected in the 2014-15 Governor's Budget.California entered the new calendar year with generally good financial news. Total revenues topped estimates for January even though projections were recently revised upward as part of the Governor’s 2014-15 Budget submitted early this year. Overall spending was less than expected.

The chart on this page compares January 2014 revenues with three separate baselines:  the Governor’s new numbers submitted in January in the 2014-15 Budget, revenue estimates made last May as part of the 2013-14 Budget, and last year’s actual numbers for January 2013. The most important reference point involves the Governor’s new 2014-15 Budget estimates. Note that even with an upward revision in the total revenue estimate compared with forecasts produced last May, January’s numbers still exceeded projections. Income and corporate taxes were ahead of projections, although these were offset somewhat by a disappointing performance on taxes levied on retail sales. Total revenues in January came in $388 million over, or 3.3%, the latest estimates. (See Figure 1.)

Income tax receipts continue to do well, boosted by increases in jobs, total earnings, and capital gains. Corporate tax receipts, which generally have been disappointing, have recently picked up. This may reflect an improvement in underlying profitability and reduced write-offs. At this point, consumer spending and taxable sales appear as the soft spot, although some of the shortfall could be a timing issue related to seasonal swings in household spending or booking of tax receipts.

Total outlays in January were about 8.0% below figures contained in the Governor’s 2014-15 Budget, although much of the shortfall likely reflects delays in disbursements that could take place during upcoming months.

Viewing California’s financial performance for the overall July 2013-January 2014 period, total General Fund receipts were about $0.5 billion, or 0.9%, above estimates contained in the Governor’s 2014-15 Budget.  (See Table 1.)  Disbursements were approximately $0.6 billion, or 0.9%, less than those assumed in the Budget.  (See Table 2.)  As a result, the $10.2 billion difference between total receipts and disbursements for the first seven months of the current fiscal year was about $1.1 billion lower than projected in January.

To finance the $10.2 billion plus the $2.4 billion loan balance carried over from the last fiscal year, the State tapped both internal ($7.1 billion) and external ($5.5 billion) sources of borrowing. As tax revenues pick up with the filing of income tax returns, this spending/revenue gap should close.

California has scored another upbeat month on total revenue performance as of January. However, recent mixed economic news, including weak national job numbers for both December and January, warrant caution. The ripple effects on consumer spending could impact retail sales taxes. The stock market’s drop in January also is a reminder that capital gains can be volatile with important repercussions on California’s crucial personal income tax base.

On balance, continued outperformance on the revenue side cannot be taken for granted, which is why spending needs to be closely monitored to keep California on an improving financial track.

Figure 1: January Tax Revenues Top Revised Estimates

Actual Vs. Governor's Budget, January 2014 ( Dollars in Millions)

January tax revenues topped revised estimates.

Table 1: General Fund Receipts

July 1, 2013 – January 31, 2014 (in Millions)

Revenue Source

Actual Revenues 2014-15 Governor's Budget Estimate 2014-15 Governor's Budget Actual Over (Under) 2012-13 Year-To-Date Actual 2012-13 Year-To-Date Actual Over (Under)
Corporation Tax $2,714.4 $2,498.2 $216.2 $2,148.5 $565.9
Personal Income Tax $37,572.3 $37,300.3 $272 $38,868.5 ($1,296.2)
Retail Sales and Use Tax $11,669.5 $11,840.6 ($171.1) $9,969.6 $1,699.9
Other Revenues $2,232.3 $2,121.9 $110.4 $2,489.4 ($257.1)
Total General Fund Revenue $54,188.6 $53,761.1 $427.5 $53,476 $712.5
Non-Revenue $1,447.2 $1,360.6 $86.6 $1,842.3 ($395.1)
Total General Fund Receipts $55,635.8 $55,121.7 $514.1 $55,318.3 $317.4

Table 2: General Fund Disbursements

July 1, 2013 – January 31, 2014 (in Millions)

Recipient Actual Disbursements 2014-15 Governor's Budget Estimate 2014-15 Governor's Budget Actual Over (Under) 2012-13 Year-To-Date Actual 2012-13 Year-To-Date Actual Over (Under)
Local Assistance $51,469 $51,815.6 ($346.5) $46,967 $4,502
State Operations $14,948.9 $15,238.1 ($289.2) $13,291.5 $1,657.4
Other ($566.2) ($633.6) $67.4 $1,174.2 ($1,740.4)
$65,851.7 $66,420 ($568.3) $61,432.7 $4,419

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