Monday, December 05, 2022

Analyst: California Budget Surplus Expected To Be $ 31 Billion

Analyst: California Budget Surplus Expected To Be $ 31 Billion

Posted by: Adam Beam | Associated Press

SACRAMENTO. California’s fiscal surplus will be $ 31 billion next year, according to a new forecast by the California Office of Independent Legislative Analyst, as revenues continue to rise despite the pandemic.

The projected surplus is so large that the office estimates California will exceed the constitutional limit on government spending by more than $ 14 billion. This could require Governor Gavin Newsom and state legislators to either cut taxes, spend more money on schools and infrastructure, or – perhaps a more popular choice in an election year – give taxpayers a discount.

California tax collections have continued to rise despite the pandemic. Californian businesses reported a record high $ 216.8 billion in taxable sales from April to June this year, up 38.8% from the same period in 2020 and 17.4% more than in those months. before the 2019 pandemic. Nick Maduros, director of the California Department of Taxes and Revenues, said it was “a sign that business owners have found creative ways to adapt during a difficult year.”

California’s “Fiscal Year” runs from July 1 to June 30. In the first three months of this fiscal year, California tax collection exceeded forecasts by more than $ 10 billion. The LAO predicts that California will collect $ 28 billion more in taxes and transfers by June 2022 than they expected.

This means that spending on public schools is likely to increase significantly. The state constitution requires legislators to spend about 40% of the state’s tax revenue each year on public education. The LAO said Wednesday that public schools and community colleges could grow by $ 11 billion.

All of this is possible thanks to the historic rise in tax revenues. In September, collections from income taxes, sales and corporate taxes were 40% higher than last September and nearly 60% higher than in September 2019. This is because retail sales are up double-digit this year and stock prices have doubled from their lows. last spring at the start of the pandemic.

But the ROD said it was “impossible” to know if these gains are sustainable. Prices for goods and services are rising due to inflation. The 1.7% nationwide rise in retail sales in October was largely due to a 0.9% rise in prices over the same time period, according to new data from the US Census Bureau. Gas prices rose even faster.

The legislative analyst’s office says most economic forecasts predict a slowdown in inflation by next year, but admits that the forecast is “accompanied by significant uncertainty.”

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