Preliminary September data: income taxes above estimates

School funding likely to increase significantly with any 2024-25 revenue gains

September is a significant state tax collection month. Preliminary California tax agency data for the month of September indicates that personal income taxes (PIT) were $1.8 billion (20%) above the budget forecast for the month, while corporation taxes were $557 million (22%) above the monthly forecast.

While PIT withholding was modestly above the monthly forecast, quarterly estimated PIT from individuals and households exceeded the forecast by more than 80% (nearly $1.5 billion). This is preliminary data and is subject to change.

U.S. stock prices, as tabulated in the S&P 500 stock index, have increased more than 20% since the beginning of 2024. This helps fuel increases in quarterly PIT payments.

For the 2024-25 fiscal year to date, based on these preliminary figures, personal income taxes are running $2.6 billion (11%) ahead of budget forecasts, while corporation taxes are $1.4 billion (42%) ahead.

Proposition 98 “maintenance factor” can be expected to increase required payments to public schools to a large extent in line with 2024-25 state revenue gains.

Authoritative information on state revenue trends is posted most months of the year in the Department of Finance “Finance Bulletin.” The last edition of the Bulletin, with August 2024 revenue totals, is here.

The state government’s cash position—obviously related to revenue trends—remains incredibly strong. As reported by the State Controller’s Office, the state’s General Fund carried a $9.5 billion cash balance on September 30, and the state’s other accounts had more than $97 billion of available (“borrowable”) balances to meet state cash flow needs. Both General Fund revenue strength and slower-than-expected state spending disbursements contribute to the strong cash position.