SAN FRANCISCO, Nov 16 (Reuters) - The California Department of Finance announced on Wednesday that the outlook for the upcoming budget was “concerning,” given lower-than-expected tax collections.
California has collected $1 billion less than it had anticipated in tax revenues since the start of the fiscal year in July and nearly $400 million less than it had projected during the month of October. Year-to-date revenues are $595 million below an expected $32.9 billion.
California’s budget is subject to “many volatile and unpredictable economic conditions,” according to a report released on Wednesday by California’s Legislative Analyst’s Office (LAO). The financial watchdog estimated that California has enough in reserve funds to weather a mild recession without cutting spending or raising taxes through 2021.
California Director of Finance Michael Cohen said in a statement on Wednesday that “the outlook for the upcoming budget is concerning and will need to account for this declining revenue and the significant uncertainties,” identified by the LAO, such as stock market performance, the potential for recession, and changes in federal policy.
Hit hard during the recession in 2008, California has slowly come back from a severe budget crisis by closing a large shortfall, boosting reserve funds, and paying down debts. (Reporting by Robin Respaut; Editing by Sandra Maler)