California Rakes in Revenues

While California has not struck gold yet, the violent downturn in revenues has given way to a violent recovery. 

For the first seven months of the fiscal year, general fund revenues are up a steep 11.3% from the prior year. That is despite a change in corporate withholding tax change that will back load those taxes but with personal income tax withholding benefit that affected comparability from July-October. On a January-to-January month only basis, revenues increased 17.7% led by personal income taxes up 22.2%.

California may not be great at managing its finances, but it does a great job reporting them in a timely manner. The California State Controller’s Office issues a monthly report on finances. This month they reported fiscal year to date numbers:

“Compared to this date in January 2010, revenue receipts were up by $5.2 billion (11.3%). This was driven by personal income taxes, which came in $4.8 billion above (19.0%) last year at this time. Sales taxes were also up $483 million (3.4%) from last year’s total at the end of January”.

This highlights the economic sensitivity of California’s revenues and the surprising performance of the state’s economic recovery. The January only numbers were even better, but those numbers are more volatile.

We are very excited to celebrate the six month anniversary of the issuance of Meredith Whitney's report next month.