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Revenue Report Sets Stage for Governor’s May Revision

Since the Governor’s release of his January Budget, we have been keeping a close eye on monthly (and during April, daily) tax receipts received by State Controller Betty Yee.  This morning Controller Yee released information about month-to-month receipts to-date for the 2016-17 FY.  As we have seen all along these month-to-month receipts have been highly volatile with some months coming in above projections (e.g., November and January) and others below projections (e.g., July and December). The month of April, just reported by the Controller, continues that volatility. 

Receipts on each of the “Big 3” taxes (Personal Income Tax, Sales and Use Tax and Corporation Tax) for April were below the levels projected last June in the 2016-17 Budget Act. This was particularly the case with the Personal Income Tax, where April receipts were 5.3% below those projections.  In the prior year, nearly 17% of Personal Income Tax receipts for the year were received in April.  

To date total revenues received by the state are $1.83 billion below last summer’s budget estimates and about $211 million below the revised projections presented by the Governor in January.  Even though there are still 2 months remaining in the current FY and more revenues to be received by the state (especially June when state estimated taxes are due), tax receipts in those months may have little impact on the 2017-18 Budget Act that will be sent to the Governor by June 15th.  All of this solidifies our expectation that tomorrow, when the Governor releases his May Revision of the budget, he will stay the course with respect to the revenue projections on which he based his January Budget.  

We will be providing you with a first look at that May Revision tomorrow afternoon, and will be providing a fuller analysis in the Budget Perspective Workshops that we will conduct around the state over the next three weeks.  For the locations and dates of those workshops, go to our website at http://capitoladvisors.org and click on Workshops.

Gerry Shelton
Capitol Advisors Group, LLC