Latest News in California's Skill at Revenue Projection: It Still Sucks
Don't bank on that Prop. 30 money, kids
As noted earlier today at Reason 24/7, California failed terribly at projecting its November tax revenue. Income tax and corporate tax were both down from predictions. Altogether revenue was down $806 million from what the state projected, a 10.8 percent drop. Total tax revenue is up over 2011 for the month, except in the corporate tax category, which is down 160 percent. That's a nice little detail for anybody trying to argue that California's tax environment is scaring away business.
The data is important because the $6 billion revenue promised by the tax increases in Prop. 30, which passed in November, are also projections. If the projections are off, well, Gov. Jerry Brown tied the school budget to that money.
And then there's the matter of what the rest of state government is doing following the passage of Prop. 30, as Cal Watchdog notes:
State bureaucrats immediately ramped up deficit spending far beyond the $6 billion annual tax increase, with the Departments of Health Services and Developmental Services increasing this month's spending by more than $1 billion versus last year. The lower tax collection and higher spending drove the state's deficit after the tax increase to $2.7 billion for the first 5 months of the 2012-13 fiscal year, which began on July 1.
The state's bad record of revenue projection (which contributed to the nearly $20 billion deficit California had logged earlier in the year) is important to keep in mind when, say, a New York Times reporter points to deficit (and surplus) projections for coming years as evidence of the state's recovery.