SAN FRANCISCO, April 10 (Reuters) - A strong inflow of personal income taxes helped lift California’s March revenue by $395.5 million, or 7.2 percent, above the estimate in Governor Jerry Brown’s state budget plan, the state controller’s office said on Wednesday.
From the July start of its current fiscal year through March, California collected $64.7 billion in general fund revenue, or $4.7 billion more than forecast by Brown’s office, State Controller John Chiang’s office also said in its monthly revenue report.
Revenue in March from personal income taxes, California’s most important source of revenue, was $324.1 million, or 14.8 percent, above estimates.
March revenue from corporate taxes was $81.9 million, or 5.8 percent, above estimates.
Revenue from retail sales taxes came in at $132.1 million, or 8.0 percent, below estimate, potentially due to the effect of a higher federal payroll tax on consumer spending.
The revenue report said California has reason to be both optimistic and cautious as it looks to the final three months of its current fiscal year.
“It will be vital that the economic recovery in jobs, income, and profits continue and it will be important to see a pickup in consumer spending,” the report said. “At the same time, the upswing in revenues cannot be taken for granted.”
With the April 15 deadline for filing federal and state income taxes approaching, Chiang said it should soon become clear if stronger-than-expected revenue reflects economic growth or if Californians are simply paying taxes earlier than usual in response to changes in tax laws.
California’s unemployment rate fell to 9.6 percent in February from 9.8 percent in January. Mississippi and Nevada also had jobless rates of 9.6 percent in February, the highest unemployment rates among the states.
“While the first nine months of revenue far exceeded expectation, income tax deposits over the next two weeks will show whether that uptick is solid or fleeting,” Chiang said in a statement.
Brown will unveil a revised budget plan in May for California’s next fiscal year. In his initial budget plan in January, Brown projected the state budget would swing to a surplus thanks to an improving economy, new revenue from tax increases and if fellow Democrats who control the legislature back his plan for holding down spending.
Chiang’s office released its March revenue report as California State Treasurer Bill Lockyer’s office compiled retail orders on a $2 billion sale of state general obligation bonds that began Wednesday morning.
A spokesman for Lockyer said an estimate on the orders would be released late Wednesday afternoon and final pricing on the bond sale would be determined Thursday.
Municipal debt analysts expect the sale to go well in part because of rising investor confidence that California’s leaders are putting the state’s finances in order.