$2.0 Billion Mark Passed

Although the numbers are still preliminary, April 10^th saw California’s bank account for the month-to-date growing $2.1 billion.  This appears to be a fair start to the monthly forecast of $13.1 billion as the heavy inflow will take place during next week.

Personal income tax receipts are key to California’s fiscal picture.  Through April 10^th, they have reached $1.9 billion.  The forecast for the April total is $10.9 billion.

Retail Tax Receipts Catch Up

Tax receipts are recorded net of various refunds that are paid and retail taxes are no exception.  This month refunds were recorded much earlier than expected and have weighed on the total.

The Board of Equalization (BOE) issues refunds on a daily basis to retailers as they reconcile their remittances.  When customers return merchandise, for example, tax receipts are returned to the merchant.

Periodically, refunds issued on a given day can exceed revenues by a large margin.   Such was the case on April 2 in contrast with last year on April 10.  Now, with at least preliminary numbers available this month for the 10th, comparisons came be made.  The result?  April so far is running virtually identical to last year with refunds exceeding payments by about $86 million.  The big refund bulge is now over and we should generally see positive net cash inflows for the balance of the month

April Tax Collections Reach $1.7 Billion

During the first nine days of April, California took in a net $1.7 billion of tax receipts, dominated by $1.8 billion of personal income tax receipts ("net" totals refers to total reciepts minus refunds paid out to taxpayers).  So far this month, sales tax refunds have outpaced tax receipts, but that performance is expected to change before month-end.

For April as a whole, personal income tax receipts will be the dominant force, accounting for more than 80% of the state’s total tax receipts as individuals file their final returns and make their estimated tax payments.

Afternoon Revenue Update

Today the Franchise Tax Board is expected to bring in its highest level of daily income so far for the month: $197 million. However, due to refunds issued for personal income, the day is expected to total $120.7 million, raising the monthly total to $1.49 billion. This will help with the month-end total, especially when the expected surge of revenues comes in next week during the 16th and 17th.

Year-to-Date Revenues Top Projections by $1.5 billion

California banked $1.5 billion more than expected at the end of the first week of April. For the period July 1, 2013 through April 8, the State’s “Big Three” revenue sources -- personal income, corporate, and sales taxes -- generated $65.0 billion versus the $63.5 billion that was predicted based on the Governor’s Budget released in January.

Personal income taxes accounted for the bulk of the positive variance, with a margin of $1.03 billion, or 102%, of the forecast. Corporate taxes beat estimates by about $550 million and were 14% ahead of estimates. Only retail sales taxes fell short of estimates, although the miss was a relatively small $80 million, or 0.5%.

Capital gains, earned primarily by wealthier Californians, are helping to fuel the State’s personal income tax receipts. Not so long ago, high-income taxpayers were required to make payments on a certain steady basis throughout the year. During the State’s cash shortages during the last 10 years, the payment schedule accelerated. The Franchise Tax Board advises taxpayers with the following: California differs from federal law. To avoid an estimate penalty, taxpayers must pay at least 30 percent by April 15 and 40 percent by June 16 of this year and 30 percent by January 15, 2015.

Perspective on March Revenue Numbers

Controller John Chiang today released his monthly report covering California's cash balance, receipts and disbursements in March 2014. Revenues for the month totaled $6.4 billion, surpassing estimates in the 2014-15 Governor’s Budget by $470.9 million, or 7.9 percent. Read the news release and related analysis: http://bit.ly/1k4eol0

April 15 A Week Away

Californians have one week to complete their tax returns, but some of the early (earlier) birds have already paid.  Between Monday and today, Tuesday, April 8, the Franchise Tax Board has collected somewhere around $300 million in personal income tax receipts according to preliminary figures.   Including the revenues from withholding for individuals and netting out refunds, the two-day take has been about $680 million.  This is about $100 million more than was collected during the comparable two-day period last year.