There is a substantial difference between the amount of taxes that are statutorily owed to the state versus the taxes that are actually remitted by taxpayers. This difference, known as the "tax gap," is currently estimated at $6.5 billion annually and is due to the underreporting of income and various other factors. The budget proposes to spend $19.6 million in 2007-08 to continue certain pilot programs and undertake several new initiatives aimed at narrowing the tax gap. We recommend that the Legislature redirect some of the proposed budget-year spending on tax gap enforcement activities in order to increase their payoff in terms of General Fund revenues."