Gulp – May revise doesn’t look good

According to State Controller John Chiang, four straight months of better-than-expected state revenues were erased in the last 10 days of April. April is the state’s biggest revenue month, because of the April 15 tax deadline and California’s overall dependence on personal income tax receipts to balance its massive budget. 

The state’s monthly cash receipts have been closely-watched as an indicator of whether the Governor’s “May Revise” of his 2010-11 budget proposal will show better- or worse-than-expected fiscal circumstances for the state. According to Chiang’s office:

[April’s] receipts dropped below the Governor’s 2010-11 budget estimates by $3.6 billion, or 26.4 percent. Through March, the States’ revenues were tracking more than $2.3 billion ahead of projections.“Four months of positive receipts were erased in the last 10 days of April,” said Chiang. “Because a surge in revenues has not come, the Governor and Legislature need to move quickly and forge the consensus needed for a balanced budget. Any delay will only limit their options and expose already struggling Californians to greater harm.”

Year-to-date revenues are now behind estimates by approximately $1.3 billion. Personal income taxes accounted for most of the drop in April, coming in $3.1 billion below projections for the month and $2.2 billion short for the year-to-date.

This is not good news. Back in January, no one was sure whether the Governor’s estimates would hold, but institutions that depend on state funding began to breathe a bit easier after the March figures came in so much better than expected. Now, it’s possible that we may have to take further cuts for the coming fiscal year. We’ll find out on Friday when the May revise is supposed to be formally released.

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