|Budget Issue:||Corporation taxes ended April around $200 million above year-to-date projections (preliminary)|
|Finding or Recommendation:||This is an update on April corporation tax collections.|
In addition to being a major month for personal income tax collections, April was also a significant month for collections of California's corporation taxes (CT). The CT is the state General Fund's third-largest revenue source.
CT Collections Were Weak Prior to January Budget Forecast. In our January 2013 Overview of the Governor's Budget, we noted that CT collections have been very weak recently and described how the administration lowered its 2012-13 forecast for CT revenues to reflect that weakness. The precipitous recent drop in CT collections is likely due in part to major tax policy changes made in recent years. Offsetting this weakness, the administration's forecast in January included hundreds of millions of dollars of new CT revenues resulting from Proposition 39, a portion of which are expected to be booked to the 2012-13 fiscal year.
Through March, CT Collections Were Running Above January Forecast. According to the most recent agency cash data received from the Franchise Tax Board (FTB), CT collections, net of refunds, ended March $201 million above the administration's most recent forecast for the fiscal year to date.
April CT Collections Close to Forecast. Preliminary FTB daily tallies of April CT collections, net of refunds, totaled $1.409 billion. This was just under the administration's $1.417 billion forecast for the entire month. (The monthly total was about 3 percent higher than April 2012's monthly total of $1.369 billion.) Additional adjustments and reconciliations are possible in the coming days.
CT Likely to End April Around $200 Million Above Administration's Year-to-Date Forecast. Based on the information we have received to date from FTB, CT collections, net of refunds, appear poised to end April around $200 million above the administration's year-to-date projections.
This post was released on May 1. A post discussing the preliminary monthly tally from the Franchise Tax Board was released on May 3 here.