(Bumped for correction – promoted by Brian Leubitz)
UPDATE: It seems I misinterpreted the press release. We are ahead of where we expected to be in last year’s budget, but behind where we expected to be in this year’s budget. About $350 million behind. If this pace continues, the majority of the triggered cuts will happen. We’ll have to wait on numbers for a few more months to see where we are going.
With the 2011-2012 budget now in place, and being held together with a few wishes and unicorn dust, Sacramento watchers will be keeping a close eye on the monthly revenue figures from the the Controller’s office. The June numbers were pretty good, all things considered.
The State ended the fiscal year with $95.5 billion in receipts and $93.8 billion in disbursements, and that fact by itself seems to be a positive sign that the unicorns are looking favorably upon our state. June revenues alone came in $440.5 million (3.7 percent) above estimates found in the May Revision of the Governor’s proposed 2011-12 budget.
Sales taxes were above projections by $21.8 million (0.8 percent) in June, personal income taxes were up $410.5 million (6.8 percent), and corporate taxes were up $156 million (7.2 percent). In total, the State Budget did expect $1.2 billion in additional May and June revenues (above those projected in the May Revise estimates) to be carried-over into the new fiscal year. By June 30, $849 million in additional revenue had materialized, with some cash flow numbers still outstanding
John Chiang and his staff in the Controller’s office has done an amazing job shifting dollars around and generally managing where our resources are hanging out. We’ll need to keep up some pretty solid numbers for the rest of the year. California’s economy has been tentatively growing, but with the ridiculousness that is the debt ceiling debate, and the shaky job growth, there is a lot of guesswork here. Time will tell if any of that expected $4Billion will materialize.
The growth in revenue can probably be attributed to people cashing out of the markets and some of the gains in the RE market from the flipping at the low end. I think the seasoned investors aren’t expecting a QE3 so there taking profits now before higher interest rates tank the market. This could happen in 2012, but I’d bet 2013 if the FED has anything to say about it. The central bank has to keep things stable during an election year after all 🙂
What will be interesting is how much treasury yields will have to rise given the FED exiting the market. Investors will want a better rate of return as they will be financing all of our deficit spending without the FED’s help. However treasuries should still be seen as a safe haven considering the problems in the Euro zone and Japan. That perceived safety could hold interest rates lower.
Either way we aren’t going to see real growth for a few years yet. Until the banks work through the shadow RE inventory and the housing/energy/etc markets truly adjust to real incomes stormy waters are ahead.
Just like Japan’s other horror stories The Ring and The Grudge, It looks like America is going to “remake” The Lost Decade.