By Jim Christie
SAN FRANCISCO, Dec 7 (Reuters) - California’s November revenue came in $806.8 million below projection in its budget, a disappointing development in light of signs that the most populous U.S. state’s economy is on the mend, the office of the state controller said on Friday.
It said in a statement that revenue from personal income taxes, the state’s most important source of revenue, missed budget estimates by $842.5 million, and revenue from corporate taxes missed projections by $187.8 million.
Revenue from sales taxes exceeded expectations by $99.0 million.
California State Controller John Chiang said in a statement that the revenues “stand in stark contrast to recent news that California is leading the nation in job growth, has significantly improved its cash liquidity to pay bills, and even long-distressed home values are starting to inch upward.”
Chiang called it “a sobering reminder” that the economy is expanding at a slow and uneven pace and that California will require “care and discipline” in managing its fiscal affairs.
Some of the weakness in personal income tax collections in November was due to revenue from sales of shares in Facebook Inc, which made its initial public offering this year, posting earlier than anticipated.
Budget planners had expected the Facebook-related revenue last month, said analyst Jason Sisney at the Legislative Analyst’s Office, California’s budget watchdog agency.
“A lot of that ended up happening in October. October, therefore, was considerably higher than forecast,” Sisney said.
California’s leaders anticipate that their state’s economic recovery and new revenue from tax increases approved by voters will help to stabilize finances.
Voters last month endorsed Governor Jerry Brown’s measure to increase the state’s sales tax and raise personal income tax rates on the wealthy.
Standard & Poor’s Ratings Services has said the state’s credit quality may improve after voters approved the measure. California is S&P’s lowest rated state at A-minus with a positive outlook.
According to the Legislative Analyst’s Office, California faces a $1.9 billion budget gap for its next fiscal year, a shortfall considerably smaller than deficits in recent years.
Chiang’s office said California’s revenue since the beginning of its fiscal year on July 1 is running $508 million, or 1.6 percent, below projections in the state budget.