California Financial Report for November

The State Controller’s office has released the November cash report for the State’s General Fund. Five months into the fiscal year (2015-2016), total receipts were up by 7.7% to $37.8 billion compared with the same period last year. Total disbursements ($52.5 billion) were down by 5.5% over the same period, but still exceeded cash receipts by $14.7 billion. As of November 30, the state’s cash balance stood at -$12.2 billion.

Total revenues (receipts from taxes, licenses, fees or investment earnings) were up by 8.1% to $37.0 billion compared with the first five months of the previous fiscal year. So far this year, total revenues are running slightly ahead of expectations even though two of the state’s top three revenue sources are falling short.

• Personal income tax revenues increased by 9.9% to $24.2 billion, beating expectations by $888.2 billion or 3.8%. Steady employment growth in California and rising incomes are the primary drivers of personal income tax growth, the state’s largest revenue source (56% of the total).
• Corporate income taxes, always volatile, plunged by 21.3% to $1.5 billion, missing the budget forecast by 8.6%.
• Revenues from sales and use taxes were up by 8.5% to $9.6 billion, but was short of expectations by 2.3%. Improvements in the state’s employment situation would generally imply more spending on taxable goods but consumers may be directing a greater share of their discretionary income to spending on services

The schedule of cash disbursements in the Controller’s report showed that expenditures on Local K-12 Education were $16.5 billion during the first five months of the fiscal year, a steep decline of 17.8% compared with the same period last year. Expenditures for Community Colleges dropped by 2.1% to $2.3 billion. Meanwhile, the UC and CSU systems have won a bit more breathing room this year. Disbursements were up by 5.2% (to $2.7 billion) from the year ago level. Contributions to CalSTRS (the state teachers’ pension fund) increased by 30.2% to $967.6 million.

Spending for the Department of Corrections was up slightly over the year, rising by 3.0% to $4.1 billion. Funds allocated to health and human services increased by 5.3% to $1.2 billion. The amount the state paid to service its debt obligation jumped by 13.6% to $2.5 billion.

As of November 30, the General Fund had $21.0 billion in unused borrowable resources against $12.2 billion in outstanding loans, which are composed entirely of internal borrowing. Because the Controller’s office is able to cover monthly cash shortfalls with internal borrowing (for the first time in 15 years), it is saving the state tens of millions of dollars in interest costs. 

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