I can answer that question! $146.3 million is the additional amount of tax collections that California projected but did not receive in February. What’s worse is that the shortfall in the fiscal year-to-date is $1.3 billion.
I’ve been preparing plenty of California tax returns, and those are generally coming in at lower amounts of taxes for 2011 in comparison to 2010. Now, I’m just one tax professional so what I see may not match the overall trend; however, I do speak with my former colleagues in Orange County and none of them are seeing a trend of clients owing more money.
The Orange County Register noted, “Whatever the case, this is the umpteenth time the controller has reported revenues have come in below projections this year, suggesting that that Legislature and governor will have yet another sizable budget deficit to address come June.” The Register is correct: The shortfall will be in the billions, likely between $10 and $16.
The problem is the same one I’ve been writing about for the last seven years: You can’t spend more money than you take in. There needs to be massive cuts in the bureaucracy in California, cuts to pensions of state employees, and cuts in regulations and taxes that drive businesses (and revenues to the state) from California. Instead, Democrats in Sacramento are proposing tax increases.
Even if the tax increase passes on the November ballot, come June 2013 the California legislature will again be talking about budget deficits. Until the fundamental problem is addressed, a Band-Aid placed on the wound won’t help.
