California Financial Report for August

The State Controller’s office has released the August cash report for the State’s General Fund. Two months into the fiscal year (2015-2016), total receipts were up by 15.1% to $14.2 billion compared with the same period last year. Total disbursements ($17.9 billion) were down by 21.4% over the same period, but still exceeded cash receipts by $3.7 billion. As of August 31, the state’s cash balance stood at -$1.1 billion.

Total revenues (receipts from taxes, licenses, fees or investment earnings) were up by 15.0% to $13.9 billion compared with the first two months of the previous fiscal year. So far this year, the state’s “big three” revenue sources have met or exceeded expectations laid out in the 2015-16 budget that was finalized just two months ago.

• Personal income taxes increased by 7.8% to $8.6 billion, beating expectations by $159.3 million or 1.9%
• Corporate income taxes edged up by 0.8% to $450.2 million, pushing past the forecasted level by 8.3%
• Revenues from sales and use taxes were up by 24.2% to $3.9 billion, running marginally ahead of projections (0.3%).

The schedule of cash disbursements in the Controller’s report showed that expenditures on Local K-12 Education were $3.7 billion during the first two months of the fiscal year, down sharply from the $8.8 billion disbursed last year. Expenditures for Community Colleges dropped by 23.5% to $821.5 million. The UC and CSU systems got off to a better start – disbursements were up by 13.0% to $1.1 billion compared with the first two months of the previous fiscal year. Contributions to CalSTRS (the state teacher’s pension fund) increased by 57.% to $332.1 million.

Spending for the Department of Corrections dipped by 0.2% to $1.7 billion, while outlays for Health and Human Services plunged by nearly half to $537.4 million. The amount the state paid to service its debt obligation was also down, falling by 12.6% to $262.3 million.

Since the state does not pay its bills or take in revenues at an even pace over the course of the year, year-to-date comparisons so early in the fiscal year can make for some confusing headlines, but based on current budget projections, this was a pretty good report card for the state. So far this fiscal year, General Fund receipts are running 5.0% of Department of Finance projections, while disbursements have come in 3.6% below expectations. 

As of August 31, the General Fund had $29.8 billion in unused borrowable resources against $1.1 billion in outstanding loans, which are composed entirely of internal borrowing. The General Fund is the source of most state spending and may borrow from other funds to even out variability in revenue and disbursement patterns. At $29.8 billion, the State’s available borrowable resources were 10.1% higher than was anticipated when the budget was signed. Unlike past years, the Controller believes that because of the state’s improved fiscal position, internal borrowing will be sufficient to met cash flow needs without having to issue revenue anticipation notes. 

Sources:  http://www.sco.ca.gov/eo_pressrel.html