In what has become a depressingly normal occurrence in California, the state makes rosy estimations of projected California tax revenue in order to get a balanced budget passed, only to discover a few months later that revenue is less than expected.
They just did it again, and the numbers are dire. State Controller John Chiang says July revenues were 10% lower than projections, with retail and sales tax down a whopping 33.5%. The total shortfall for July was $475 million. The Controller added “it is too soon to attribute lower-than-expected sales taxes in the month to slower private consumption” but it’s difficult to see how it could be otherwise.
Making this worse California is relying on passage of a tax initiative on the November ballot to raise $8.5 billion and way overestimated the amount of tax revenue that would be raised from the Facebook IPO.