With the recent receipt of various postponed tax payments, the impact of recent economic weakness and last year's financial market distress on state revenues has become clearer. The postponed payments came in much weaker than anticipated. As a result, we now estimate 2022-23 revenues to be $26 billion below Budget Act projections. Historical experience suggests this weakness is likely to carry into this fiscal year and next. Overall, our updated revenue outlook anticipates collections to come in $58 billion below Budget Act projections across 2022-23 to 2024-25. We will release our Fiscal Outlook next week, which will discuss the ramifications of this revenue shortfall for the state's budget.
California's technology companies, including giants like Apple, Google, Nvidia, and Meta, are some of the most valuable companies in the world and support thousands of high-paying jobs in the state. Many employees at these companies receive equity pay, such as stock options, as part of their compensation. State income tax withholding on this equity pay has grown notably, reaching 6 percent in the last few years. The recent jump in these companies' stock prices, which affects withholding on equity pay, has bolstered otherwise weak income tax withholding during 2023.
We discuss our May revenue outlook.
Based on the most recent revenue and economic data, we currently estimate that collections from the state’s “big three” taxes—personal income, sales, and corporation taxes—are likely to fall below the Governor's Budget assumption of $200 billion in 2022-23.
Although October colletions from the state's “big three” tax revenues—personal income, corporation, and sales taxes—came in far ahead of Budget Act assumptions, this is not indicative of better than expected revenue performance for 2022-23 overall. Instead, a closer look at the data shows that the recent trend of revenue weakness continued in October.
August state income tax withholding was down $450 million (6.1 percent) compared to last year.
We discuss our May revenue outlook.
Based on the most recent revenue and economic data, we currently project that there is a very good chance that collections from the state’s “big three” taxes will exceed the Governor's Budget assumption of $185 billion in 2021-22 by at least several billion dollars.
Based on the most recent revenue and economic data, we currently project that there is a very good chance that collections from the state’s “big three” taxes will exceed the Governor's Budget assumption of $185 billion in 2021-22 by at least several billion dollars.
Based on the most recent revenue and economic data, we currently project that there is a strong chance that collections from the state’s “big three” taxes will exceed the Governor's Budget assumption of $185 billion in 2021-22.
California income tax withholding collections in November were up nearly a third over last November.
We discuss the revenue estimates in our recently released Fiscal Outlook.
California income tax withholding in October was up 8.2 percent over October 2020, a slower growth rate than in the three previous months.
Based on the most recent revenue and economic data, we currently project that there is a good chance that collections from the state’s “big three” taxes will exceed the budget act assumption of $170 billion in 2021-22 by at least several billion dollars.
The California income tax withholding surge continues, as September collections to date are 23.5 percent above last September.