|Budget Issue:||Fewer tax refunds than projected in March. 13-14 revenues still above Governor's forecast.|
|Finding or Recommendation:||This note provides preliminary information concerning March 2014 state revenue collections.|
This note contains data concerning California’s "Big Three" General Fund tax collections (personal income, corporate income, and sales taxes) for the month of March 2014. (This note has been updated as of April 16, 2014, with final Franchise Tax Board collection information for the month of March.) For the 2013-14 fiscal year to date, the "Big Three" General Fund taxes are running about $1.3 billion above the administration's January 2014 forecast, based on this preliminary data from the end of March.
Lower-Than-Projected Refunds Help Revenue Situation. March marks the midway point of the state’s personal income tax (PIT) filing and refund season. Refunds during the month were $244 million below the levels of last year and $436 million less than the amount projected by the administration’s Department of Finance (DOF) as part of the Governor’s January budget submission. Principally due to the lower-than-projected refund levels, March total net PIT collections exceeded DOF’s projections for the month by $359 million. In addition, net collections of the corporation tax (CT) exceeded DOF projections by $110 million. For the two income taxes combined, the data indicates that net collections in March exceeded DOF projections by $469 million.
The Two Income Taxes Now Over $1.4 Billion Above DOF Projections for 2013-14. As of the end of February, the state’s personal and corporate income taxes were $967 million (2.3%) above DOF’s projections for the 2013-14 fiscal year to date. Based on the agency cash data for March, these two income taxes ended March at $1.44 billion (3.2 percent) above DOF’s projections for the fiscal year to date. (The PIT is $1.035 billion [2.5 percent] above the projections, and the corporate income tax is $401 million [10.2 percent] above the projections for the fiscal year to date.)
Sales Taxes Slightly Below Forecast for March. As of the end of February, sales taxes were $127 million below DOF’s projections for 2013-14. Preliminary March data shows that sales taxes were just slightly below the DOF estimate for the month, bringing the 2013-14 year-to-date total for these taxes to $139 million below forecast.
LAO Revenue Outlook. Our office’s November 2013 revenue projections were $1.9 billion higher than the administration’s January 2014 projections for the General Fund’s “Big Three” taxes (personal income, corporate income, and sales taxes) in the 2013-14 fiscal year. To date, the state’s revenues seem on track to finish above the administration’s projections in 2013-14. Revenue collections and refunds during the key month of April, however, can alter this assessment—either positively or negatively. Our office is issuing daily tracking notes concerning April income tax collections via our website, with occasional updates via the @LAO_CA Twitter feed. Based on recent history, the key information concerning April revenues will emerge during the weeks of April 14-18 and April 21-25. Both our office and the administration will release new state revenue projections in May.
Personal Income Tax
PIT Withholding: $4.446 billion (up $0.203 billion [4.8%] from March 2013; down $0.049 billion [1.1%] from DOF projection)
Other PIT Collections: $0.793 billion (up $0.113 billion [16.6%] from March 2013; down $0.021 billion [2.6%] from DOF projection)
LESS: Refunds: $2.200 billion (down $0.244 billion [10.0%] from March 2013; down $0.436 billion [16.5%] from DOF projection)
Total (All Funds): $3.039 billion (up $0.560 billion [22.6%] from March 2013; up $0.366 billion [13.7%] from DOF projection for the month of March)
General Fund PIT: $2.986 billion (up $0.550 billion [22.6%] from March 2013; up $0.359 billion [13.7%] from DOF projection for the month of March)
For 2013-14 fiscal year to date (General Fund): $1.035 billion (2.5%) above DOF projection
CT Collections: $1.61 billion (down $0.013 billion [0.8%] from March 2013; up $0.055 billion [3.5%] from DOF projection)
LESS: Refunds: $0.13 billion (up $0.029 billion [28.8%] from March 2013; down $0.055 billion [29.5%] from DOF projection)
Total: $1.48 billion (down $0.042 billion [2.7%] from March 2013; up $0.110 billion [8.0%] from DOF projection for the month of March)
For 2013-14 fiscal year to date: $401 million (10.2%) above DOF projection
Sales and Use Tax (SUT)
Total: $1.598 billion (down $0.012 billion [0.7%] from DOF projection for the month of March)
For 2013-14 fiscal year to date: $139 million (0.8%) below DOF projection
The revenue information in this note is presented on the agency cash basis, meaning that it is based on real-time, daily data from the state’s tax agencies. Agency cash is the method used in forecasting and tracking monthly revenues relative to assumptions included in the state’s annual budget act. The key information source concerning agency cash is the monthly Finance Bulletin published by DOF.