Federal cost recoveries above projections in January

Total revenues were $361 million below monthly General Fund projections

Higher-than-projected federal cost recoveries in January 2025 resulted in total General Fund revenues being just $361 million (1.5%) below the administration’s forecast for the month (last updated on January 10, 2025). The higher-than-projected federal recoveries offset a $710 million gap in personal and corporate income taxes discussed in my February 12 post, which mentioned how that gap could be related to tax payments delays resulting from the Los Angeles wildfires.

For the 2024-25 fiscal year to date, General Fund revenues are $2.2 billion (2.0%) above the administration’s most recent projections due to strong revenue performance in December 2024, as I mentioned in that earlier post. Withholding revenues—affected little by the Los Angeles wildfires—have been very strong recently, as the Legislative Analyst’s Office has noted.

The updated revenue figures were included in the February 2025 Finance Bulletin, released most months by the Department of Finance as the authoritative tracker of monthly General Fund revenues received by California’s tax agencies.