All Articles

Below are the administration's Proposition 30 revenue estimates as of the January 2016 Governor's Budget proposal. These estimates will next be updated by the administration with the May Revision in May 2016. The estimates are included in the administration's multiyear budget projection and conclude in 2018-19: the last fiscal year affected by the 2012 ballot measure's income tax increases for certain high-income Californians.

Figures Above Assume Continuing Economic Growth. As with our office's main scenario Proposition 30 estimates last November, the administration estimates above generally reflect an assumption of continuing economic growth through the end of this decade. As both our office and the administration have discussed recently, it is not assured that such steady growth will occur. Even since the beginning of 2016, stock market turmoil has dimmed somewhat the near-term state revenue outlook, and the timing of the next recession cannot be predicted with any precision.

Proposition 30 Revenues Could Be Notably Higher or Lower in Any Given Year. Recently, our office and the Department of Finance produced a required joint analysis of a proposed measure to extend the personal income tax rate increases of Proposition 30. That analysis concluded that in 2019 (the first year of the proposed personal income tax increase extension), the measure might generate around $5 billion of increased revenue if the stock market and economy were weak. Conversely, if the stock market and economy were strong in 2019, the measure might raise around $11 billion that year. We concluded that about $7.5 billion (near the midpoint of that large range) was "one reasonable expectation of the additional revenue that this measure would generate in 2019." Thereafter, the amount would rise or fall each year depending on trends in the stock market and the economy, the joint analysis found. These findings demonstrate that future Proposition 30 revenues could be quite different from the estimates of either the administration or our office.

Follow @LAOEconTax on Twitter for regular California economy and tax updates.