Aug 14 (Reuters) - California tax revenue was $475 million or 10.1 percent below projections in July, State Controller John Chiang said, adding that it is too soon to attribute lower-than-expected sales taxes in the month to slower private consumption.
The monthly update showed that the revenue shortfall was mainly due to poor performance of retail and sales taxes, which were down 33.5 percent or $295 million from the levels expected by the fiscal 2012-2013 budget.
“Revenue collections were disappointing for the month of July,” Chiang said in a statement on Monday. “However, because spending appears to be tracking and the funds that the State depends on for liquidity are performing well, California’s cash outlook remains stable.”
Sales taxes were expected to hit a relatively small amount of $882 million in July, which is considered a vacation month. The budget forecast a collection of $2.3 billion from August’s sales tax.
Other components of total revenue, such as personal income taxes and corporate taxes, were in line or above forecast in July.
California’s general fund receipts in July totaled $4.52 billion while disbursement in the month was $12.98 billion. As a result, California’s cash deficit, which ended the last fiscal year in June at $9.6 billion, widened to $18 billion at the end of July.
The controller noted the cash deficit is being covered with temporary loans from special funds.
This week California, the biggest issuer of municipal debt, is selling $10 billion revenue anticipation notes.
Governor Jerry Brown in June signed a budget for the fiscal year that, among other measures, relies on new revenue based on the assumption that voters in November will approve a ballot measure raising the state’s sales tax and increasing income tax rates on the wealthy.
If voters reject the measure, California will need to cut more spending, including more than $5 billion on politically popular education programs, to keep its books balanced, Brown has said.