State Continues Economic Recovery

by Brian Leubitz

State Controller John Chiang today released his monthly cash report covering California’s  for July. Total revenues for the first month of Fiscal Year 2014-15 totaled $5.4 billion, beating estimates in the Budget Act by $231.9 million, or 4.5 percent.

“Even though July is usually a weak revenue collection month, the new fiscal year is off to a strong start,” Chiang said. “While the State plans to borrow operating funds through revenue anticipation notes, the $2.8 billion needed solely for smoothing out the timing of revenues is at the lowest level since the 2006-07 fiscal year. If we can continue to reduce short- and long-term debts, we can continue to improve our fiscal condition.”

Something of a trifecta occurred, with sales, corporate and income tax collections beating estimates and coming in higher than the prior year. Income tax collections for the month of July came in $244.9 million, or 6.4 percent, above estimates. Corporate taxes topped estimates by $38.1 million, or 13.5 percent.  Sales taxes also beat estimates by $36 million, or 4.1 percent.

The State ended the last fiscal year on June 30 with a positive cash balance for the first time since June 30, 2007. That means the State had funds available to meet all of its payment obligations without needing to borrow from Wall Street or the $23.8 billion available in its more than 700 internal special funds and accounts.

To be clear, there is still a lot of work to be done on our economic recovery. We still have far too many long-term unemployed Californians as well as many of the new job development being in low-paying service sector jobs. And then there is the long-term question of revenue stability and what we do when Prop 30 sunsets in a few years.

All that being said, it is nice to have enough money to pay your bills.