There’s no money for new spending, Governor Brown said as he unveiled the annual May revision of his January budget proposal.
Although state revenues are a little higher than he thought they’d be back in January, they’re still $3.3 billion lower than state finance officials projected last June.
If these are the good times, why are state revenues lower than expected?
State Finance Director Michael Cohen said the revenue shortfall is mainly due to sales tax revenue coming in below expectations. People just didn’t make purchases at the rate that was anticipated.
The answer to that question is on page 5 of the state’s “Revenue Estimates” document. “The level of wages has been revised downward,” it says. The Economic Research Unit further explains, “In the updated 2015 taxpayer data from FTB (Franchise Tax Board), the level of taxable wages was revised downward. This supported our interpretation of the weak cash data for sales tax receipts.”
In other words, Californians are earning less money and buying less stuff.
And these are the good times. We’re in “an economic recovery that won’t last forever,” the governor said.
Read the whole story in the Press Enterprise