State Revenues Continue Below Estimates

The Department of Finance has reported that State General Fund revenue is continuing to be less than estimated when the budget was released in January. Since the January budget release, revenues have been $1.3 billion less through March. Personal income tax is the primary reason for the lower revenue with a $1.65 billion below estimate revenue. The other tax revenues are close to being on target. The lower personal income tax revenue indicates that the budget year estimates could also need to be lowered.

The Proposition 98 budget year guarantee, however, might not have a significant change if school funding moves from Test Three to Test Two. The May Revision will provide more clarity, but for now the February revenue estimates made by the Legislative Analyst appear to be the more accurate estimates. Those estimates indicated that the current year Proposition 98 funding is approximately $600 million above the minimum. This opens the door to the Legislature attempting mid-year reduction of uncommitted and unspent funds.  

Please contact me if you have any questions at 916.441.3300 or dwalrath@m-w-h.com.

~Dave Walrath