As April was closing, we noted the big surge in tax revenues as people got their taxes in on the last few days. Now it seems that we are even doing better than we expected then:
State officials are reporting an unexpected $2-billion surge in tax receipts that will help lawmakers close the remaining $15-billion budget deficit, and the Capitol is humming with hope that more is coming. …
Some analysts say the surprise – the sign of a brightening economy – could be just the beginning. Revenue has crept up incrementally for months and jumped in April, when people paid their taxes. It may be time to raise projections, they say, with the potential for billions more to flow into state coffers.
“As much as a third of the deficit will probably, hopefully, disappear,” said Brad Williams, an economist and former chief revenue forecaster for the Legislature.(LA Times)
Of course, in California nothing is easy. This increased revenue has come at a time when the Governor is attempting to find some way, any way, to extend the taxes from two years ago. It’s a great thing, of course, but it sure does make the people who don’t want to really address the structural imbalance want to wait it out.
But in the end, we won’t close this deficit with mere hopes and prayers. It is going to shrink, perhaps to as low as $10 billion or so, but it isn’t going to close on its own. And the next $10 Billion of cuts won’t come easy. That these increased revenues come with the higher tax rates should be a sign that extending them won’t kill the economy, but those facts are fairly unlikely to sway any of the Republicans. You see, no matter what evidence of economic realities that you give them, they all point to one thing: lower taxes. Economy is going strong? Lower the taxes! Budget deficit? Lower the taxes! California is burning? Lower the taxes!
The tax extensions aren’t what I would choose for sound policy, but they the best shot. Now if we could just get the 2 Republican votes in the Legislature, we could get back to trying to rebuild the California Dream.
Several bad unemployment reports in a row, government spending contracting at all levels, etc.
I would not be at all surprised to see a lot of that deficit come back pretty soon.
Republicans in power are cheapskates and represent only those who don’t want to pay their fair share of the taxes that they owe and are being quite indigenous. Heck someone should point out that Social Security is Constitutional to them as that was decided by the US Supreme Court back in 1937…