{"id":419847,"date":"2011-05-09T01:51:34","date_gmt":"2011-05-09T01:51:34","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/05\/09\/california-gets-a-tax-windfall\/"},"modified":"2011-05-09T01:51:34","modified_gmt":"2011-05-09T01:51:34","slug":"california-gets-a-tax-windfall","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/05\/09\/california-gets-a-tax-windfall\/","title":{"rendered":"California gets a tax windfall"},"content":{"rendered":"
\n

\"california,California Governor Jerry Brown faces some tough budget decisions despite higher-than-expected tax revenues.<\/strong><\/span> By Tami Luhby<\/a>, senior writer<\/span>May 5, 2011: 5:29 PM ET<\/span><\/p>\n

NEW YORK (CNNMoney) — California is enjoying an unexpected $2.5 billion spike in tax revenue, which could help the state close its massive budget shortfall.<\/p>\n

But the Golden State is not out of the deficit woods yet. Governor Jerry Brown is expected to unveil a new budget plan on May 16, based on updated projections for revenue and spending, that could contain draconian cuts.<\/p>\n

The revenue surge mainly stems from an increase in personal income taxes, which are running $2.3 billion higher than projected for the first 10 months of the fiscal year, the Legislative Analyst’s Office reported this week.<\/p>\n

The other two major tax categories are not feeling quite as flush. Sales tax income is running $225 million above forecast, but because of timing issues, the office considers collections as being close to forecast.<\/p>\n

Corporate income taxes, meanwhile, are running $654 million below projections.<\/p>\n

After years of dismal tax revenues, states are currently benefiting from a bump in collections, thanks to the rebounding economy and stock market. State tax revenue rose by 7.8% in the fourth quarter of 2010 from the same period a year earlier, according to the Rockefeller Institute of Government.<\/p>\n

California, however, has had to contend with a $26 billion shortfall for the remainder of fiscal 2011, which ends June 30, and the following year.<\/p>\n

Lawmakers in March approved measures — including major spending cuts — to close about $14 billion of the deficit, but are divided over how to address the remaining gap. Governor Brown, a Democrat, wants residents to vote on extending higher sales and personal income tax rates<\/a>, but Republican lawmakers have refused to give him the votes needed to put the issue on the ballot.<\/p>\n

While the increased tax revenues is certainly good news, experts cautioned that tough decisions still lay ahead.<\/p>\n

“It only represents a down payment on the big budget problems facing the state,” said director of fiscal studies for The Rockefeller Institute.<\/p>\n

California might still have to make major cuts to education and other government services to eliminate its shortfall. Higher tax receipts alone won’t do the trick.<\/p>\n

“Even if there is an increase in revenues, it’s not going to close all of the budget problems,” said Jason Sisney, the legislative office’s director of state finance.<\/p>\n

Also, the jump in collections may not last, said H.D. Palmer, spokesman for the state Department of Finance. The state learned this the hard way a decade ago when the dot-com bubble, which kept California rolling in revenue, came to an end.<\/p>\n

“There’s no guarantee the bump in revenue will be ongoing,” Palmer said. \u00a0\"To<\/a><\/p>\n

First Published: May 5, 2011: 5:17 PM ET<\/p>\n<\/div>\n

See the rest here:
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