While the recent rainfall here in the Valley has made for a great spring skiing season in the high country, April has been less kind to the state budget. At of the end of March, General Fund revenue collections were $2.7 billion ahead of forecast levels for 2009-10, with $1.0 billion of that amount coming from the personal income tax, leading some to hope that an “April Surprise” would take a large bite out of the budget shortfall. With just one day left in April, the only surprise is just how weak tax collections for the month appear to be. According to the State Controller’s “Daily Revenue Tracker,” personal income receipts for the month of April totaled $6.9 billion through Thursday, April 29, $3.3 billion below the $10.2 billion anticipated in the Governor’s budget forecasts. Hopes for a last minute reprieve have faded fast, with April 29 collections totaling a meager $99.5 million.
What does this mean? First, in light of the weakness of the state’s economy – unemployment remains stubbornly high and key economic indicators are still weak – modest revenue collections should not come as a surprise. If anything, budgeteers should be thankful that revenues have held up as well as they have. The magnitude of the shortfall also increases the importance of a balanced approach to bridging the remaining gap – one that includes not only spending cuts, but also additional tax dollars, as well as federal aid. The Governor will release his May Revision on May 14, which includes both updated revenue forecasts and policy proposals. In light of recent revenue totals, we doubt that there will be much there to celebrate.
— Jean Ross