Sunday, July 12, 2009

California State Revenue Data: June 2009

For the final month of the fiscal year, state revenue actually showed a modest $2.4 billion increase over last year. This was due mainly to corporations reporting extra income ahead of a new 20% penalty on underreporting taxes during the year. The penalty threat forces corporations to overreport earlier in the year, thus providing what is essentially an interest-free loan to the state. From the Controller:

As noted last month, the Governor signed a bill in October that imposed a 20% understatement penalty on corporate tax. Companies were given the option to avoid the penalty by filing an amended return and paying their actual tax liability by May 31, 2009. A large sum of payments related to this penalty were counted at the end of May and the beginning of June. As a result, miscellaneous corporate taxes in June soared to over $2.1 billion according to Franchise Tax Board's collections - an increase of over 1022% from last June - and exceeded the FTB's $1.9 billion estimate of related payments.
Of course, tax refunds for this overpayment will act as a drag on revenue throughout FY 09/10, unless the state issues IOUs instead.

Thus ends the year of the worst decline in state revenue since the 1930s, with revenue falling 11.6%.


Anonymous said...

Major banks not accepting IOUs is a good thing. Right now the legislators are not giving themselves IOUs, they're getting regular cash checks.

Time to increase the pressure and running out of personal cash might do the trick.


Max said...

Looks like a deal is imminent. I also have it on good authority that a fourth furlough day for state workers will be announced today, but that rumor might no longer be operable if a deal is struck. The Dems have been silent on the state worker pay issue lately, so there might be something unpalatable, like permanent pay cuts, coming down.

patient renter said...

Interesting. Do you have the details of the deal on good authority? :)