California State Tax Revenues Increase by 4.1% in 3Q15

The U.S. Census Bureau released figures for third quarter state and local tax collections by state and type of tax. At $211.5 billion, total state tax revenues collected across all fifty states (excluding Washington, DC) were up by 3.2% in the third quarter of 2015 compared with the same period in 2014. In California, tax revenues were up by 4.1% to $32.7 billion in the third quarter – a reflection of stronger economic growth and the improving health of state and local government finances within California.

Two of California’s three largest tax revenue categories reported increases in collections during the third quarter. General sales tax revenues rose by 3.0% to $9.0 billion, but were outpaced by the national increase of 4.4%. Personal income tax revenues were $15.6 billion in the third quarter, an increase of 8.9%. Nationally, personal income taxes were up by 6.2%. Personal income taxes are California’s largest revenue source (making up nearly half of all tax revenues collected in the third quarter), but personal income tax revenues are also notoriously volatile making budget planning and forecasting difficult.

California’s corporations paid $1.3 billion in income taxes during the third quarter, a decline of 17.6% compared with the same period a year ago. Corporate tax payments tend to be even more volatile than personal income taxes, but they count for a relatively small share of California’s “Big Three” revenue sources. Across the U.S., corporate income tax revenues edged down by 0.1%.

Other noteworthy changes include a 9.5% increase in California’s property tax revenues, the result of rising home prices, and a decline of 8.7% in motor fuel taxes, which help to fund expansion and maintenance of state’s roads and highways.

Altogether, sales and personal income taxes made up 67% of state revenues nationwide. California relies more heavily on these two revenue sources compared to other states. Sales and personal income taxes regularly contribute about 75% of total tax revenues received in a given quarter.

Source:    http://www.census.gov/govs/www/qtax.html