Bottom Line: What the Numbers Mean | Receipts | Disbursements

November's tax receipts could look somewhat disappointing at face value, but delays in collections and recording appear to have accounted for much of the shortfall. Relative to projections contained in the 2013-14 Budget Act, total November revenues fell $376 million, or 5.9%, shy of estimates. Those figures do not include approximately $440 million in late November sales tax deposits which, because of the late Thanksgiving holiday, were recorded to the State's books in December.

When counting only revenues received and recorded during the month of November, all three major revenue sources -- corporate, personal income, and retail sales taxes -- came in below projections.

Personal income tax receipts missed expectations by less than $9.0 million, which on a base of $3.1 billion, represented a shortfall of just 0.3%. Better-than-expected collections from withholdings and other payments were offset by larger-than-anticipated refunds. Corporate tax receipts displayed ongoing softness, missing projections by $62.6 million. Sales tax revenues missed November projections by $398 million, but only because the "Black Friday" weekend fell at the end of November, which impacted the timing of collections and when they were recorded in the state ledger.

For the first five months of fiscal year 2013-14, total General Fund revenues were still ahead of Budget estimates even with the absence of late sales tax deposits. The positive variance equaled close to $270 million. Disbursements were $126 million below forecast. The state's budget picture, in terms of the difference between receipts and disbursements, was at a minimum $396 million better than expected.(See Figure 1.)

Looking at the revenue side in greater detail for the July 1-November 30 period, personal income taxes -- California's principal revenue source -- were $561 million, or 2.9%, above expectations. (See Table 1.) The impact of capital gains, in part due to the surge in stock prices, has helped drive estimated taxes well above expectations. Retail sales taxes trailed expectations, but only because of the aforementioned timing issues. Corporate income taxes have remained the primary area of disappointment as various tax law changes has increased the difficulty of estimating this source of revenue.

California ended November with a General Fund cash deficit of $19.6 billion, which is approximately $350 million less than projected in the Budget Act. This cash deficit is being covered by a combination of $5.5 billion in external borrowing and $14.1 billion in borrowing from internal state funds. With the State borrowing less – coupled with internal funds carrying higher-than-anticipated balances – the State’s liquidity position is performing better than projected by $745 million (+10%).

Related Reading:

• Department of Finance's 2013-14 State Budget Summary
• Controller's State Finances 101

Figure 1: Cash Numbers Still Beating Expectations

July 1-November 30, 2013, Variance From Estimates, ($ in Millions)

Table 1: General Fund Receipts

July 1, 2013 – November 30, 2013 (in Millions)

Table 2: General Fund Disbursements

July 1, 2013 – November 30, 2013 (in Millions)

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