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John Chiang: California’s books still look good

By Josh Richman
Wednesday, May 8th, 2013 at 10:18 am in Jerry Brown, John Chiang, state budget.

California took in $15.03 billion in revenue in April – $119.9 million short of estimates, but still leaving the Golden State in relatively solid financial condition, state Controller John Chiang reported today.

Total revenues for the first 10 months of the fiscal year exceeded Gov. Jerry Brown’s January projections by $4.6 billion (6.1 percent), due largely to $4.4 billion (8.5 percent) in better-than-expected personal income tax revenue.

“We’ve reached an important milestone in California’s economic recovery. For the first time in nearly six years, we closed out a month without borrowing from internal state funds to pay our bills,” Chiang said in a news release. “But, there remains significant debt that must be shed before we can claim victory and these unanticipated revenues provide us with an important opportunity to take further steps toward long-term fiscal stability.”

Chiang said California had to borrow at unprecedented levels over the past six years from its own internal special funds and from Wall Street to meet its payment obligations; the state also withheld some payments and used IOUs for only the second time since the Great Depression. June 2007 was the last time the State was able to pay its bills without leveraging its internal funds.

California ended the last fiscal year with a $9.6 billion cash deficit, but April 30, that deficit narrowed to $5.8 billion, Chiang said. The gap is being covered by $10 billion in external borrowing, which the state will start repaying later this month.

Personal income taxes for April came in $275 million (2.2 percent) below monthly estimates outlined in the governor’s budget, due mostly to fewer returns filed and more refunds paid out than expected in the month of April. But corporate taxes for April were $6.6 million (0.5 percent) above monthly estimates and sales tax receipts were $113.4 million (26.6 percent) above estimates.

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  • RR senile columnist

    Thanks for this insightful posting. Very clever, Mr Chiang. Please include this article in the next Food Stamp distribution.

  • JohnW

    We’ve seen this movie a dozen times before. They get a non-recurring spike in tax receipts due to rising stock prices and people cashing in stock gains before higher state and federal tax rates go into effect. Then we pretend that the spike will continue. It may be just the opposite. People may have cashed in stock gains to beat the new tax rates and won’t have more gains they want to cash in for a while. I didn’t vote for Prop. 30, the new income tax rates for upper income. I thought that, in the long term, they would lead to individuals and businesses fleeing the state, or deciding to do their business expansion in other states, or rearranging their finances to minimize exposure to the new state tax rates. I still believe that, despite the current “surplus.”

  • Bruce R. Peterson, Lafayette

    The headline does not match the text. I see the words deficit, borrowing, IOU’s,debt, leveraging & $119,000,000 short of estimates. So John Chiang is assuring us the the State isn’t bankrupt yet?