Income taxes: $5.7 billion below projections as of 1/31 (preliminary data)
Sales tax and other revenue data, yet to emerge, may also affect current shortfall
Preliminary data from the state’s tax agencies (“agency cash” data) shows that January 2024 ended with personal and corporate income taxes running $5.7 billion below the Governor’s most recent budget estimates as of January 31. This is the cumulative agency cash shortfall for income taxes in the 2023-24 fiscal year as of the end of January. Actual receipts are compared against estimates incorporated into the Governor’s January 10 budget proposal.
Sales tax and other revenue data will emerge in the coming weeks. That data may reduce or add to the cumulative shortfall. This revenue shortfall will tend to add to the state’s 2024 budget deficit and reduce the Proposition 98 minimum guarantee for school funding.
In January 2024, personal income tax (PIT) withholding was up 4.4% from January 2023, but still fell short of the Governor’s budget proposal estimates by $1 billion. PIT estimated taxes fell $4 billion short of estimates for the month, according to the preliminary agency cash data. Corporation tax receipts were on target for January, but December tallies were about $1 billion below Governor’s budget estimates.
Preliminary agency cash estimates are subject to later revision. Authoritative agency cash revenue results for January are scheduled for publication on February 20 in the Department of Finance Finance Bulletin. California’s state treasury balances remain very strong due to rainy day and General Fund reserves, as well as special fund balances.