Home News California Fiscal Issues and Information page California Fiscal Focus Summary Analysis of General Fund Cash Receipts (2007 - 2014) November 2014 Cash Report Summary Analysis Bottom Line: What the Numbers Mean | Receipts | Disbursements

Bottom Line: What the Numbers Mean | Receipts | Disbursements

Published November 10, 2014

October left California with treats instead of tricks this year. Revenues totaled $6.0 billion during the month, beating estimates produced by the Department of Finance (DOF) for the 2014-15 Budget Act by a hefty 12.3 percent.

Corporate taxes represented a large upside surprise. (See Figure 1.) While the DOF had projected only about $25 million in revenues, payments came in at $328 million. Tax refunds were much lower than anticipated.

Personal income taxes also were strong and outperformed estimates by 8.4 percent. The positive results on both the personal income and corporate sides reflect and validate the solid economic expansion California continues to enjoy. Higher-than-estimated withholding was the most significant driver behind the overshoot on the personal income side. Rapid growth in the technology sector, producing both more jobs and above-average incomes, may be contributing to the overperformance of withholding.

The only unwelcome guest last month was the impact of retail sales on revenues. Retail sales taxes fell 4.1 percent short of expectations. Consumers either are not shopping as much as anticipated or are buying goods and services not subject to California’s sales tax.

California’s revenue position for the first four months of Fiscal Year 2014-15, which began on July 1, is favorable. (See Table 1.)Total revenues have been $1.2 billion ahead of DOF projections, led by a $1.0 billion positive variance for personal income taxes. An overshoot of $700 million on corporate taxes has more than offset a $500 million shortfall in retail sales taxes.

On the spending side, total disbursements were $613 million, or 6.1 percent, more than expected during October. This appears to be a “catch-up.” For the fiscal year to date, disbursements are still about $1.1 billion below projections. (See Table 2.)

For the July through October period, the State’s greater-than-projected revenues and less-than-expected expenditures have treated California’s cash flow position well. While the timing differences between receipts and outlays generally mean a deficit for the first four months of the fiscal year, it has run $2.6 billion below expectations at $17.8 billion. A combination of internal and external borrowing is being tapped to fund the current loan balance.

October witnessed volatile and stressful days in the stock market, but ended on an upbeat note. California’s economic momentum is helping the State retake a path of financial stability. The passage of Proposition 2, which strengthened the rainy day fund, indicates voters’ support for the State’s efforts to improve California's financial health.

Figure 1: Personal and Corporate Income Taxes Blow Past Forecasts

Variance, October 2014 (Millions of Dollars)

Table 1: General Fund Receipts

July 1, 2014 – October 31, 2014 (in Millions)

Table 2: General Fund Disbursements

July 1, 2014 – October 31, 2014 (in Millions)

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