I’m shocked, just shocked to find out that the Bronze Golden State is already falling behind on collections.
That was sarcasm, of course.
In June, California collections were $350 million below the budgeted amount. In July, they were $539 million less. That’s a total of $889 million in two months. If we extrapolate that out for an entire year, we get a $5.3 billion shortfall. Back when the budget passed I said,
And there’s a projected $4 billion increase in revenues…inserted because California had $1.2 billion in higher tax collections than projected in April. Finally, there’s the usual accounting gimmicks (moving certain payments to the following fiscal year) that will result in $1 billion of “savings”.
Surprise, surprise: $5 billion in shortfall with a budget containing $5 billion of imaginary revenue.
Unfortunately for Californians, there’s nothing to drive an increase in state revenues. As I wrote last month,
The problem for California is, there really is no driver for continued revenue growth. The new Amazon Tax will lead to less revenues in future months (it won’t be a huge loss, but it will be a loss) rather than the $200 Million increase that was written into the budget. Unemployment is increasing, and California businesses continue to face regulatory hell. I’m not seeing any improvement in the national economy.
California policymakers are hoping, of course, that I’m wrong. But for business to expand there must be reasons to do so. The administration in Washington is giving no one a reason to expand. Sacramento is following suit. Unless something drastic changes, California is looking at another year of malaise.
What the state legislature should do is obvious. Unfortunately, what they will do is also obvious: nothing.
Tags: 2011CalBudget