State Controller Reports More Money

The state controller has just released his data on cash receipts for 2012-13 through May.  As it turns out, the month of May brought in more cash than forecast in the governor's May revise, just under $800 million more.  This outcome will add fuel to the conflict between the governor and the legislature as to how much revenue to project for 2013-14.  The governor has argued that much of the extra money that has come in this year is a one-time capital gains result that cannot be assumed to continue.

As our previous post noted, the legislature is due to produce a budget by Saturday.  But it may not be one that is in accord with the governor's desires.  The governor could veto the budget or use his line-item veto on it.  In theory, the legislature could override the governor although some Democrats might be reluctant to do so.

You can find the controller's cash statement at http://sco.ca.gov/Files-ARD/CASH/fy1213_may.pdf

In the meantime, with the new numbers, the legislative Democrats are likely to be celebrating the fact that there is more:

It's always good to hit the target but...

We'll let William Tell us about hitting targets.

As we have noted in prior postings, the state received what seemed to be a windfall of $4+ billion in income tax revenue early in 2013 which seemed possibly related to taxpayer concerns about fiscal cliffs, etc.  But the receipts did not reverse later and a key indicator is what happened to income tax receipts in April, the big month for that tax.

According to the state controller, April income tax receipts came in as expected under the governor's budget estimate for the current fiscal year.  See below:

So it appears the windfall, probably a one-time event, remains.  As we have also pointed, much of the money will probably go to K-14 under Prop 98.  However, more is better than less for UC.  We miay not get more, but if there had been less, we likely would have gotten a share of it.

And even when you hit the target, things don't necessarily go exactly as planned:

Windfall $4+ billion in state receipts remains in state treasury through March

We have noted that over $4 billion beyond the governor's budget estimates for the current fiscal year began showing up in the state treasury at around the time of the congressional fiscal cliff, etc., decision.  It appeared to come from upped withholding of state income taxes, perhaps from individuals taking capital gains at the end of 2012 to avoid possible tax hikes thereafter.  No one seems to know for sure but once the money arrived, it stayed, i.e., it didn't seem to be some fluke of timing that subsequently reversed.  The latest state controller's cash statement continues to show no reversal.  You can find it at:
http://www.sco.ca.gov/Files-ARD/CASH/fy1213_march.pdf

Of course, April will be a big month for income tax collections so we will get a better fix on what is happening a month from now.

More is better than less:

Windfall Revenue Remains

In January, the state controller reported a surprise windfall of about $4 billion arrived in personal income tax revenue.  It was unclear why but possibly it had to do with speculation by wealthy taxpayers about the fiscal cliff or prospective income tax changes at the federal level.  No one knows.  An interesting question was whether the windfall would unwind in February, i.e., come in below estimates.  It did unwind a bit.  But basically, there still is an unforeseen extra $4 billion in revenue so far this year. What the impact might be on the state budget for the coming year has yet to be seen.  The governor's budget proposal was developed before the extra money arrived. He probably would not favor treating what may be a one-shot windfall as an ongoing flow. However, the legislature might see the matter differently.

The latest cash statement (through February) from the controller is at:

http://www.sco.ca.gov/Files-EO/fy1213_feb.pdf

As the song says, it's hard to hold on to the wind as if it were permanent:

It could be a timing-is-everything-situation

The state controller released his January cash statement for the state.  For the first seven months of the fiscal year, revenues are running over $4 billion ahead of what was anticipated in the original budget.  More than all of this amount is coming from the personal income tax.  I say more than all because sales tax has come in below forecast - suggesting that the underlying economy is not booming.  So why the jump in income tax revenue?  It may be that because of the fiscal cliff, etc., wealthy folks - who account disproportionately for the income tax - did things such as take capital gains before January 1.  So we could have a one-time windfall. If so, there may be less of a take from capital gains in the future.  January is a month in which quarterly estimated tax is due - which again is likely to reflect wealthy folks who pay in quarterly.  I have not seen an explanation as to why such folks might make bigger payments than forecast - unless it is a taking of capital gains in 2012.  The basic reality here is that no one knows.

It might be of interest to note that UC so far has gotten about $900 million from the state which is less than 7/12 of what we are due.  So the state is still tending to pay us later rather than sooner and leaving it to UC to go get any needed financing.

You can see the controller's statement at:
http://www.sco.ca.gov/Files-EO/fy1213_jan.pdf

Anyway, as the song says:

Timing is Everything

The state controller's monthly cash report through December is out today and on the face of it there is less revenue than anticipated and more expenditure than anticipated for the first half of the year.  However, the controller in footnotes and in a supplementary statement attributes these results to timing rather than some fundamental departure from budgetary expectations.  Certain sales tax receipts that would normally have gotten into the general fund in December were not transferred there until January.  And certain local expenditures were paid out earlier than had been expected.

In any event, these figures are too recent to have figured into the governor's forthcoming budget proposal for 2013-14 due out tomorrow.

The controller's statement is at:
http://www.sco.ca.gov/Files-EO/fy1213_dec.pdf

His summary interpretation is at:
http://www.sco.ca.gov/Files-EO/01-13summary.pdf

Timing is everything when it comes to cash statements: