State Likely To See $4B in Extra Revenue for January, LAO Finds
California will collect about $4 billion more in January income tax revenue than forecasters predicted, according to the Legislative Analyst's Office, the Sacramento Bee reports.
Legislative Democrats have said that the state should use any extra revenue to increase spending on health and welfare programs.
State fiscal experts say that the expected January revenue is the largest one-month overage in recent memory.
The Bee reports that the revenue bump likely is the result of aligning tax changes at the state and federal level.
Potential Uses for Funding
Senate President Pro Tempore Darrell Steinberg (D-Sacramento) has said that any extra money the state receives should be used to:
- Pay off debts;
- Expand certain state programs; and
- Boost the state's rainy-day fund.
Steinberg also has talked about using extra revenue to restore dental benefits for low-income adults, which were eliminated under cost-cutting strategies.
Officials Say State Should Be Cautious
However, Steinberg said that lawmakers should be "relatively cautious" about the extra money "until we get more information."
State finance officials say that high-income earners could have paid the entirety of a retroactive tax increase for 2012 in January, even though they are able to wait until April 15 to pay the new taxes. This could cause the state to receive less money in April than expected, the Bee reports.
Jason Sisney -- chief forecaster at the LAO -- said, "[B]y May, we can begin to form better judgments" about the budget, adding, "This is just one data point in a complex series. It might be the harbinger of very good news or it might be a periodic blip that disappears later."According to Sisney, "There were a lot of unusual events occurring in recent months that could be influencing this. These monthly reports need to be regarded with a significant degree of caution" (Yamamura, Sacramento Bee, 1/23). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.