With the next budget crisis looming on the horizon, regardless of the outcome of the May election, budgeteers are anxiously turning their attention to the daily cash count out at the Franchise Tax Board (FTB). FTB staffers are busily tearing open envelopes and counting cash to determine just how big the actual shortfall will be. Once the purview of Capitol insiders, the State Controller now posts the daily cash count, along with a comparison to the 2008 tax filing season, on his website. The Legislative Analyst ‘s Office (LAO) projects that revenues will fall short of the projections used for the February budget agreement by $8 billion. April tax collections will play a major role in determining whether the LAO’s estimates overshoot or undershoot the actual shortfall.
Heading into the all-important month of April, 2008-09 revenues collections were $737 million (1.3 percent) below estimates used for the February budget agreement. Most – $647 million – of the shortfall was due to lower-than-anticipated sales tax collections. Corporate income tax collections also lagged projections, while personal income tax collections were right on target for the year-to-date. The weakness in revenue collections reflects the continued economic downturn, including rising unemployment, falling new home construction, and sagging retail sales.
— Jean Ross