March 22, 2021
February gross revenue collections (before accounting for refunds) from the state’s three largest taxes—the personal income tax, corporation tax, and sales tax—were ahead of budget projections by $1.6 billion (14 percent). Gross collections for the fiscal year to date are $10.5 billion (8 percent) ahead of budget projections. As we discussed in last month’s post, these higher-than-expected collections likely will increase the state’s one-time budgetary windfall (discretionary budget resources). The increase in the windfall, however, will be considerably smaller than the amount of surplus tax collections as much of the money will go toward satisfying constitutional school funding and reserve requirements.
Overall, net collections (accounting for refunds) were up $3.8 billion in February. This is because personal income tax refunds in February were well below budget expectations. This largely is a result of a slower-than-expected rollout of the Golden State Stimulus. As this program ramps up, higher refunds over the next few months should balance out the lower-than-expected refunds to date.