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July California Tax Revenues Plunge More Than 10% Below Expectations

Tyler Durden's picture


Even as the Fed continues to pretend that keeping interest rates at zero for what is now becoming apparent will be an infinite amount of time is an appropriate substitute for the absence for the elimination of actual cash flows, we once again get a reminder that life in the real economy, there were people can not just print their way out of trouble, practical issues such as reality still matter. One such example comes to us by way of California which just announced that state tax revenue plunged in July, falling more than 10% below expectations, and as the LA Times blog says, "making it more likely that deeper cuts to public schools built into the state budget in case of a stalled economic recovery will occur." It adds: "Gov. Jerry Brown and state lawmakers patched up the final $4 billion of California’s budget shortfall this year by hoping for a windfall economic recovery. Those hopes are now fading fast. Tax collections in July were $538.8 million below budget forecasts, according to state Controller John Chiang." And just like the proposed Deficit Reduction Plan will crash and burn courtesy of the completely unknown trillions in yet undisclosed savings, so California is now waking up to a bad hangover after realizing that the deus ex machina in unidentified billions of "revenues" forgot to make an appearance.

Income taxes were up slightly, but sales and corporate collections lagged by a combined nearly $210 million. But the biggest drag was from the unidentified $4 billion that budget writers had banked on.


“Every drop in revenues puts us closer to the drastic trigger cuts that could be imposed next year," Chiang said in a statement. Those automatic cuts include a reduction in schools spending that could shrink the academic year by as many as seven days in some districts.

And unless the Fed can continue to baffle them with bullshit, by declaring that the recession is here, but it is really good for your 401(k), California's troubles are only set to escalate.

Worse, the sagging tax collections were reported before the recent stock market turmoil. The Dow Jones industrial average plunged by more than 600 points on Monday. California relies very heavily on capital gains taxes from the stock taxes.

We are confident California will survive. After all it merely need to tell its taxpayers that courtesy of ZIRP to perpetuity, they all just got much wealthier, and if not, then they should bring their grievances to the Fed Chairman. In the meantime, tax hikes, and spending cuts for the state, which has to have a balanced budget, at least on paper, are imminent.


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Tue, 08/09/2011 - 17:29 | 1544079 Cole Younger
Cole Younger's picture

California has been fucked up for years.They will spend 12 billion a year on illegal immigrants (health care, other services, education, incarceration, etc) but when in a budget pinch, they will cut schools, and other services for citizens. I am not saying they shouldn't cut unions and other wasteful spending, but they could save a ton of money by adopting Arizona's illegal immigration laws and hire Sheriff Joe to run the California department of Justice.

Tue, 08/09/2011 - 19:28 | 1544541 Dr. Acula
Dr. Acula's picture

>illegal immigrants... citizens

You can rightfully say whether people are welcome or unwelcome on your property. But you have no say when it comes to other people's property. For example, it's none of your business if I allow "illegal" immigrants onto my property.  If you think you have a say, then that shows you don't respect other people or what they do with their own property.

It's this reckless disregard for property rights that's at the very root of California's problems. And it's the socialist child concentration camps that indoctrinate children with this diseased thinking.

Tue, 08/09/2011 - 17:29 | 1544081 nah
nah's picture

how much do we pay people to design these overengineered unsustainable ruthless systems of commerce


if thats what there supposed to be

Tue, 08/09/2011 - 17:33 | 1544095 lunaticfringe
lunaticfringe's picture

About a month ago, I saw some shit about how California was experiencing a budget/tax surplus for the year. Am I stark raving mad? Did anyone see that besides me?

Tue, 08/09/2011 - 17:36 | 1544107 dexter_morgan
dexter_morgan's picture

hmmm, better hurry and raise taxes since we know it can't possibly be a spending issue

Tue, 08/09/2011 - 17:40 | 1544126 KowPie
KowPie's picture

Select Hunt Over Onerous Terrain Bullet Assault Marinate Broast Ingest....mmmmmm... SHOOT BAMBI.

Tue, 08/09/2011 - 19:16 | 1544522 Dr. Acula
Dr. Acula's picture

Um... what does venison have to do with California?


Tue, 08/09/2011 - 23:44 | 1545158 Cathartes Aura
Cathartes Aura's picture

shhh, no worries, just the Cow lobby trying to divert your digestive juices.

Wed, 08/10/2011 - 09:56 | 1546019 Iam_Silverman
Iam_Silverman's picture

" just the Cow lobby trying to divert your digestive juices."

I suppose the "eat More "Chikin"" campaign didn't yield the desired results?

Tue, 08/09/2011 - 17:40 | 1544130 MyKillK
MyKillK's picture

It was also revealed today that the cost estimate for the first leg of the California High Speed Railway, connecting two unimportant cities in the Central Valley, have increased by $3 to $7 Billion. And this is flat ground going through cheap agricultural land. Imagine trying to go through the Grapevine or buying up the necessary land in Southern California and the coast...

Total cost of project likely to exceed 3 times what was originally projected when the bond measure was passed.

Wed, 08/10/2011 - 09:57 | 1546026 Iam_Silverman
Iam_Silverman's picture

"connecting two unimportant cities"

A city is always unimportant when it's one you don't live in.......

Tue, 08/09/2011 - 17:41 | 1544131 AssFire
AssFire's picture

You people are not so stupid as to depend on the government for anything??

Only a fool dependent on the government would oppose cutting ALL entitlements. The funds don't exist so why count on ANY of them? Who really thinks that the Government is going to give them heathcare etc when they were barely able to pay off the first 10% of the original ponzi boomers here and all their shit is long spent. I would have agreed that it would be senseless to cut education, but since the gov/unions have destroyed the system- screw it.

Tue, 08/09/2011 - 17:49 | 1544153 Debt Rolling
Debt Rolling's picture

A lot of people think the government is a supranatural God not submitted to economic laws, like my grandmother (and probably the grandmother of many people here). 

For her, it is "weird" not to pay Social Security/pension contributions and just rely on building capital. "Aren't you afraid not to have a retirement?" "I hope you pay your taxes like a good sheep", etc. xD Fortunately the male part of my family is more clear-sighted. 

Tue, 08/09/2011 - 23:48 | 1545164 Cathartes Aura
Cathartes Aura's picture

ah yes, twas teh grannies that fucked up this fabulous nationstate, all these long decades, centuries. . . feminazis all.


Tue, 08/09/2011 - 17:48 | 1544161 KowPie
KowPie's picture

The first series of political threats is to cut education, police and essential services. Generate a large wave of public dissent from the masses and then do nothing. When the shit hits the fan claim a victory at having saved said services when nothing was done (or ever intended to be done). Continue to shear the sheeple, occasionally poking them in the rear while waiting in line to be sheared. Rinse. Repeat ad nauseam.

Wed, 08/10/2011 - 00:28 | 1545217 DeadFred
DeadFred's picture

It seems you're familiar with California politics.

Tue, 08/09/2011 - 17:41 | 1544132 KowPie
KowPie's picture

Kalifornia. Land of the fruit and nut. Looks like the fruits are getting kicked in the nuts.

Tue, 08/09/2011 - 17:44 | 1544145 the grateful un...
the grateful unemployed's picture

and remember when arnold took over he refinanced californias debt, by rolling it forward (at what were thought to be historically low rates, but which by now might seem a bit attractive to the bond holders) with a provision that if the state couldn't meet the payments, (the bond deal was to be financed with sales and cigarette taxes) they would tap into the general fund.

ad to that any downgrade to the CalPers system which is (front)run by Goldman Sachs, in which any shortfall to revenue projections would also be made up by the general fund.

that general is going to get one heckuva workout.

of course they never should have let Amazon get away with cheating them on the sales tax, something which amounts to corporate welfare (no shortage of that, as LA CC just approved a 1.2 billion dollar stadium - will only cost them 275M in new bonds, and of course many many many hidden deals that will cost them dearly - and which we never learn until years later - will we ever learn? corporations are liars who take their money back to the home office, pay their workers crap wages, and cheat the government out of tax revenue, while adding to the number of working poor, who then need government health and food stamps - think Walmart)

but in the first place the trouble started in california when some Republicans in DC blew a housing bubble.

right after they turned off the electricity.


and our answer to Bush is Obama. (cue canned laughter here)

Tue, 08/09/2011 - 17:53 | 1544188 KowPie
KowPie's picture

Bushbama vs Obamush Same coin, two sides. The only difference is now that the Odumbo side has landed up it keeps pointing to the Bushog side. Kalifornia must truly be a state full of tards given their political acumen.

Wed, 08/10/2011 - 00:33 | 1545223 DeadFred
DeadFred's picture

California has the best government money can buy. A couple years ago in a major election not a single incumbent lost his/her seat state wide, and this was with approval ratings for congress and the legislature in to teens. I wonder how that happens?

Tue, 08/09/2011 - 17:58 | 1544203 Hephasteus
Hephasteus's picture

"and our answer to Bush is Obama. (cue canned laughter here)" Bush is a manifesting generator. He's not reasonable at all. Baby bush that is. The problem is he manifested a massive amount of hatred and resistance. If that guy is a working "organized thought being" after this lfe then nobody will ever come back to earth again.

Obama is indirect. He's trying to get back support by being very deceptive. He appears reasonable but the same agenda marches forth.

Tue, 08/09/2011 - 18:23 | 1544292 KowPie
KowPie's picture

Unlike his campaign rhetoric of a "transparent" administration his actions in office (lying, deceit, counter-productivity, etc.) are more transparent than prime lens glass.

Tue, 08/09/2011 - 23:53 | 1545177 Cathartes Aura
Cathartes Aura's picture

but, but, isn't ahnold an austrian???

that was a great post by the way, some important pieces that many here have overlooked.

Wed, 08/10/2011 - 10:41 | 1546270 the grateful un...
the grateful unemployed's picture

during the recall election campaign, it was generally acknowledged that the late Peter Camejo won the debates. The caveat was, he can't win, he belongs to the Green Party. (For some reason the media accepts the Tea Party as legitimate, in the current context, but at the time a GP candidate for governor was unthinkable) and result of this is that the GP has stopped running candidates for higher office. The Tea Party has already won Congressional seats, but compared to the Greens, or the Libertarians, they have no policy, no organization. call it the bizarro world of third political parties.

they were going to get an amendment to allow Arnold to run, they thought he was Reagan II, Ca governor, actor, GOP moderate. to be fair Reagan couldn't get elected in this environment. its very tough, very professional, and very crooked

Tue, 08/09/2011 - 17:50 | 1544169 rosiescenario
rosiescenario's picture

Out here in the land of fun and sun,

Someone forgot that we do not have printing presses to run.


....and on top of that, property tax revenue is also in the tank, so local governments are also in trouble.


CA managed to pretty well duplicate layers of the Fed. bureaucracy....time now to fire all those folks and get rid of layer upon layer of regulation which only drives entrepreneurs out of state.

Tue, 08/09/2011 - 17:49 | 1544176 navy62802
navy62802's picture

This is bullish ... just another indication that the REAL economy is doing far better than Wall Street.

Tue, 08/09/2011 - 17:52 | 1544179 jm
jm's picture

Just want to send a sincere thank you to all the Meredith Whitney groupies for giving me such a nice buying opportunity yesterday.



Wed, 08/10/2011 - 10:01 | 1546049 Iam_Silverman
Iam_Silverman's picture

"such a nice buying opportunity yesterday."

Hope you loaded up.  You gonna be rich, man!

Tue, 08/09/2011 - 17:57 | 1544201 rosiescenario
rosiescenario's picture

A modest proposal (and one other states might wish to adopt):


CA should follow the wise lead of our Corporations and outsource all of its prison system. I am sure that China could do it for about 1/10 what it currently costs us and I would also be willing to bet that the level of recidivism would show an incredibly marked improvement.

Right now the construction of prisons far out paces that of schools. We can change that.

Tue, 08/09/2011 - 18:06 | 1544237 Moe Howard
Moe Howard's picture

They are insane in Calif. I was stationed there in the Army. We spent a month at a time at Hunter Liggett, wore the same clothes, only ate MREs, slept on the ground with a pancho liner at best. But prisoners live in a building with a gym and tv?

Move them outside, let them dig latrines, live in tents, dig ditches for exercise. Stop making prison a reward.

Tue, 08/09/2011 - 20:18 | 1544703 Uncle Remus
Uncle Remus's picture

Paging Sheriff Joe Arpaio, you have a call holding.

Tue, 08/09/2011 - 18:04 | 1544218 Moe Howard
Moe Howard's picture


Tue, 08/09/2011 - 18:05 | 1544231 AwlDone
AwlDone's picture

What??? Only banked on 4 Billion?  If we are talking about unidentified, banked-upon funds... Why not push the envelope and say a GAZILLION!  The bigger the lie... 

Oh, well.  Bienvenidos a Califonamexico!  Take what you can and run.

Tue, 08/09/2011 - 18:11 | 1544252 johnjb32
johnjb32's picture

This was long overdue. I was expecting huge cuts to CA's education system back in January. CA is the first states of many that will eventually have to hit the bankruptcy button, once Congress allows states to file.

Tue, 08/09/2011 - 18:48 | 1544409 bugs_
bugs_'s picture

taxpayer flight

Tue, 08/09/2011 - 18:58 | 1544453 caerus
Tue, 08/09/2011 - 19:28 | 1544557 russwinter
russwinter's picture

I wonder if the rating agencies have noticed the dead in their tracks Federal tax collections reported in the Daily Treasury Statement for the month of July through today?  Last year during this period Treasury collected $200.9 billion, and this year it is $200.7 billion. I also wonder when the CBO has to fess up on it's far too optimistic tax projection for the current FY 2011 (Sept) and for next year?

Tue, 08/09/2011 - 19:31 | 1544571 pierre66
pierre66's picture


which btw will be the price of 1 oz. Gold after Ben prints instead of allowing nature to have it's way......

Tue, 08/09/2011 - 19:41 | 1544608 penisouraus erecti
penisouraus erecti's picture

they should take a cue from the feds and start printing their own currency and paying off everything with that.

Wed, 08/10/2011 - 10:05 | 1546073 Iam_Silverman
Iam_Silverman's picture

"they should take a cue from the feds and start printing their own currency and paying off everything with that."

Where have you been over the last year?  That is old news - ever hear about the scrip (IOU's) they issued when they "ran out of money"?  The main issue was that the banks didn't accept the scrip, and they couldn't use it to pay their tax bill with either!

Tue, 08/09/2011 - 19:51 | 1544632 Breaker
Breaker's picture

"Why in hell would they cut anything that is for kids (i.e. School budgets ). That's insane thinking and governing."

What makes you think most education spending is "for the children?" It's for the people who run unions and it's for the campaign contributions that go to California legislators from compulsory union dues.

Public education funding long since ceased having anything to do with the blessed children.

Tue, 08/09/2011 - 20:12 | 1544687 penisouraus erecti
penisouraus erecti's picture


The propagandist are VERY VERY good at convincing people otherwise however.

Tue, 08/09/2011 - 20:26 | 1544719 squexx
squexx's picture

Let's see, wetback illegals by the millions and cities like Frisco actually sheltering them. WAY overpaid public union employees with insane retirments. Taxing and red taping everyone to the point they leave the state. It goes on and on.

California, especially SoCal is a full toilet that needs to be flushed. Hopefully the state WILL go bankrupt and can start over. Let those overpaid unions and wetbacks fend for themselves!

Flush the toilet!

Tue, 08/09/2011 - 20:44 | 1544761 Max Cynical
Max Cynical's picture

9,111 retired California government workers receive pensions in excess of $100,000 from CalPERS and they're all listed here.

Tue, 08/09/2011 - 20:48 | 1544776 Max Cynical
Max Cynical's picture

Here's more...

5,259 retired teachers and administrators receive pensions in excess of $100,000 from CalSTRS...


1,642 retired University of California employees receive pensions in excess of $100,000 from UC...

Tue, 08/09/2011 - 21:22 | 1544860 penisouraus erecti
penisouraus erecti's picture

Sounds a lot like effing Illinois where my domocile is...........

It pays to be in the Illinois university system


Wed, 08/10/2011 - 12:49 | 1547061 MisterMousePotato
MisterMousePotato's picture

University system!?!

There is a list online of Illinois public employees and their remuneration. Believe it or not, there is a high school teacher in Illinois making almost $650,000 a year:

Name: Bouman, Timothy
Salary: $632,000
Position: High School Teacher
Full/Part Time: Fulltime
Percent Time Employed: 100%
Assignment: English (Grades 9-12 Only)
Years Teaching: 12
Degree: Master’s
School Name: Noble Street Charter High School
District Name: City of Chicago SD 299

And let's not forget about:

Name: Ancelet, Barbara
Salary: $609,300
Position: Psychologist
Full/Part Time: Fulltime
Percent Time Employed: 100%
Assignment: Psychologist
Years Teaching: 20
Degree: Master's
School Name: Spec Educ Assoc of Adams County
District Name: Spec Educ Assoc of Adams County

Name: Ballough, Tiffany
Salary: $379,600
Position: Speech/Language Pathologist
Full/Part Time: Fulltime
Percent Time Employed: 100%
Assignment: Speech and Language Impaired
Years Teaching: 1
Degree: Master's
School Name: Spec Educ Assoc of Adams County
District Name: Spec Educ Assoc of Adams County

If you care, you can go see for yourself … name, school, etc. And there are just thousands of others just like them. THOUSANDS. Maybe millions. In every state, county, city, and who knows what Redevelopment Agency throughout the country. Not to mention the Feds. Not to mention pensions and medical benefits. Three months off each year. Etc. Etc.

A lot of this information is public record, and can even be found online. For example, the online sister of the San Francisco Chronicle published such a list for California a few years ago. Of state employees making over $100,000 a year. (Well, about half of them, anyway.) It was thirteen hundred freakin' pages long with name after name after name on each page. Not including pensions, medical, housing allowances, car allowance, cellphones, private chefs, and personal watercraft.

This is freakin’ crazy, and if you don't think that that adds up ... with 20 or 30 million such?

Look, folks. This isn’t politics. Or economics. It’s math.

Tue, 08/09/2011 - 21:06 | 1544821 boomerbaby
boomerbaby's picture

Last month I flew from California to Florida.  The woman sitting next to me was headed to Clearwater to buy a condo.  She said her accountant told her to move her domicile out of California.  A few months later  she saw her accountant again who asked "Haven't you moved yet?"

Wed, 08/10/2011 - 00:20 | 1545211 dwdollar
dwdollar's picture

Stories like that are depressing.  The last thing we need is for Californian refugees to infect other parts of the country with their degenerate ways.

Wed, 08/10/2011 - 08:45 | 1545705 Uncle Remus
Uncle Remus's picture

ding. ding. mf'ing ding.

Tue, 08/09/2011 - 21:52 | 1544943 Arch Duke Ferdinand
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Arch Duke Ferdinand

Wed, 09/14/2011 - 05:22 | 1667585 chinawholesaler
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