State’s September Receipts $1.1 Billion Above May Estimates

SACRAMENTO — Receipts for September were above the Governor’s May Revision estimates by $1.1 billion, or 15.3 percent, State Controller John Chiang reported October 11.

Corporate taxes were up $378.7 million — 46.1 percent — and sales taxes came in $60 million — 2.9 percent — above estimates. Personal income tax receipts were 22 percent above estimates, $732.9 million, although that increase is likely the result of accelerated payments caused by recent changes to the tax deadlines, rather than a sign of a significant upturn in the economy.

“It’s difficult to celebrate a budget deal that does so little after so long,” said Chiang. “The latest casualties of this historically-late budget include the many schools, taxpayers and daycare providers whose payments will now be delayed so that long-suffering Californians who received nothing from the state for the past 100 days will finally get some financial relief.”

The outstanding bills from this year’s budget delay total $8.3 billion, Chiang said. Small businesses, community clinics and local governments  have not been paid by the state since  July 1.

After balancing  September’s better-than-expected cash receipts and expenditures, the state’s available cash to make  payments dips to $3.5 billion at the end of October, creating a need for at least $4.8 billion in this month alone.

Chiang has repeatedly warned that the state faces large cash-flow problems in October. To confront this cash problem and avoid the danger of IOUs, the Legislature approved AB 1624, which defers some payments until the state treasurer can sell revenue anticipation notes to cover cash flow.

For 27 of the past 28 years, such notes have been used to smooth over cash shortfalls during the early “revenue-dry” months of the fiscal year until the bulk of annual revenues are received in the last third of the year. Usually obtained by September or October, this year’s notes have not been sold because no budget was signed until October 8.

CalWorks funding, local education apportionments, tax refunds and community college payments are among those temporarily deferred by AB1624. These deferrals provide the cash necessary to pay back small businesses that contract with the state, community clinics, local programs and most other entities that went without payment during the three-month budget delay.

The controller’s website includes a chart showing the cash problem that follows enactment of the budget , a breakdown of the budget’s payment deferrals and a page of frequently asked questions and answers.

Here are September’s financial statement and the summary analysis.