California's Budget Miracle A Mirage After All

Tyler Durden's picture

Just under a month ago, the mainstream media and blogging coat-tail-riders all hailed the miracle that was a huge windfall rise in California's tax receipts as a sign; a glimpse of what was to come from our centrally planned utopian recovery. Surpluses, taxes up, life is good. Unfortunately, as is always the case in reality, if its too good to be true, then it is! The LA Times reports that the historic $5bn revenue bump appears to have been an accounting anomaly! Just as state accountants were starting to allocate the magical inflow of tax receipts, Governor Brown's administration says the extra money was "likely the result of major tax law changes at the federal and state level having a significant impact in the timing of revenue receipts." Taxpayers were paying a share of their bill early, getting income off their books in the hope of limiting exposure to the tax hikes that recently kicked in. The administration was expecting that money to arrive in April. Now, officials are saying it won't, and that just as January's receipts soared, they'll be offset by a spring plunge. We need another miracle, stat!

 

Via The LA Times,

The surge of revenue that showed up unexpectedly in state coffers last month may well be offset by a revenue dip in coming months, according to Gov. Jerry Brown's administration.

 

The surprise money has been the source of much speculation in the Capitol. Unanticipated tax receipts filled state coffers with more than $5 billion beyond initial projections for January — more tax dollars than are allocated to the entire state university system in a year.

 

The revenue bump was historic. But the question for budget experts was whether lawmakers could begin allocating the windfall toward government programs and tax breaks — or whether the money amounted to an accounting anomaly.

 

Brown's budget office now advises in an official cash report that it is probably the latter. Lawmakers need not do much reading between the lines to understand that the governor does not see the revenue boost as an occasion to pack the budget with extra spending.

 

The report says the extra money was "likely the result of major tax law changes at the federal and state level having a significant impact in the timing of revenue receipts."

 

That is: Taxpayers were paying a share of their bill early, getting income off their books in the hope of limiting exposure to the tax hikes that recently kicked in.

 

The administration was expecting that money to arrive in April. Now, officials are saying it won't, and that just as January's receipts soared, they'll be offset by a spring plunge.