State Tax Revenue Exceeds Estimates
State tax revenue for April exceeds estimates by the administration of Gov. Arnold Schwarzenegger (R) by at least $1.5 billion, leading to debates about whether to use some of the money to fund programs, reduce the state deficit or use it as a reserve for several lawsuits, including suits dealing with the state prison health care system, the San Francisco Chronicle reports.
As of Wednesday, California had collected $9.7 billion in taxes for the month. The Franchise Tax Board has an additional 2.3 million tax returns to count in the remaining two days of the month.
According to the Chronicle, the increased revenue "recasts the budget debate" as Schwarzenegger prepares to release his revised budget proposal next month and the Legislature prepares to take up the proposal.
Some Republican legislators have called on Schwarzenegger to use some of the revenue to pay down the state debt, while Democratic lawmakers are seeking increased funding for public schools and restoration of a cost of living increase for some aged, blind and disabled residents who receive state assistance.
H.D. Palmer, a spokesperson for the Department of Finance, said that paying down state debt is Schwarzenegger's primary priority for the funds.
State Legislative Analyst Elizabeth Hill said, "The extraordinary cash developments ... feel like the revenue performance of the late 1990s," adding, "But we don't fully understand the basis of the revenue surge and how much is one-time in nature."
The Chronicle reports that using some of the funds as an emergency reserve could "guard the state against potential exposure" in several lawsuits, including a series of lawsuits that has led the administration to request a funding increase of $370 million for prison health care (Lucas, San Francisco Chronicle, 4/27).