DOF Reports State Revenues Up Again

By Vernon Billy - April 20, 2010

For the third straight month in 2010, state revenues were higher than projected.  The Department of Finance (DOF) recently reported in its Finance Bulletin that the state’s General Fund agency cash for March was $670 million above the 2010-11 Governor’s budget forecast.  According to DOF, year-to-date revenues were $2.68 billion above estimates.

Below is a summary of the DOF March Bulletin.

Personal income tax revenues to the General Fund were $132 million above the month’s forecast of $2.252 billion. Withholding receipts were $423 million above the estimate of $3.112 billion and other receipts were $137 million higher than the projected level of $465 million.  The gain in receipts was offset by refunds, which came in $425 million over the estimate of $1.285 billion; it is not clear how much of this month's refund variance may be due to cash flow. April will be a critical month for this tax as final returns or extension requests for the 2009 tax year are filed.  Year to date General Fund income tax revenues were $1.047 billion above estimate.

Sales and use tax receipts were $32 million below the month’s forecast of $2.059 billion.  March cash includes the second prepayment for first quarter sales and use tax liabilities.  Year-to-date, the sales tax cash was $583 million above expectations.

Corporation tax revenues were $486 million above the month’s estimate of $1.026 billion.  Prepayments were $297 million above the forecast of $332 million and other payments, which include the final payments for 2009 calendar year corporations, were $103 million higher than the $888 million that was anticipated.  The gain in final payments suggests that underlying profits in 2009 were stronger than expected.  Total refunds for the month were $86 million lower than the estimate of $194 million.  Year-to-date revenues were $861 million above estimate.

Total Vehicle License Fee General Fund revenues reported in March were $5 million higher than the estimate of $117 million.  Year-to-date revenues were $9 million below forecast.

Revenues from the insurance, estate, alcoholic beverage, and tobacco taxes were $9 million above the month's forecast of $309 million.

In less than 30 days, the state will report total revenues through April, which includes tax day receipts from April 15th.   While the steady increase in revenue is a positive sign, it is unlikely that these increases will be sufficient enough to substantially close the States $18-20 billion budget deficit and solve the state’s fiscal crisis.  Despite this fact, we, along with everyone else, enthusiastically embrace any news of increased revenues for the State.

 

Editor's Note:  Vernon M. Billy is president of Governmental Solutions Group, LLC (GSG) a Sacramento-based consulting and legislative advocacy firm. GSG serves public and private education organizations, non-profit organizations and private sector companies.