Newsom Misses California Budget by $2 Billion in January!
California Gov. Gavin Newsom’s missed budget in his first month in office by $1.81 billion on a $2.53 billion crash in personal income tax collections.
Despite the State of California tax collection in December missing budget by -$4.82 billion, newly inaugurated Gov. Newsom proposed a record$144.2-billion spending plan for the 2019-2020 Budget on January 9 that included spending another $5.2-billion for "Cradle-to-Career" education, $1-billion for earned income tax credit for the poor, and $100 million for refuge immigrants fleeing Central America violence.
California officials at the time, claimed December’s huge revenue miss was due to high-income taxpayers making 2018 payments in late 2017 to avoid the Trump Tax and Jobs Act maximum cap on state and local tax deductions of $10,000. Finance officers reassured this writer that January’s shortfall would be made up next month and the new governor forecast another $6 billion in revenues for the 2019-2020 Fiscal Year that begins on July 1.
But January tax collections of $16.631 billion fell -$2.602 billion short of the $9.233 budget projection. Estimated quarterly tax payments by higher income fillers that can be somewhat variable came in -$2.079 below budget at $9.389 billion. But employer tax withholding that tends to be a true indicator of the state’s economic trend came in -$563 million below budget, an 8 percent shortfall.
The nonpartisan California Legislative Analysts’ Office has revealed that California has “Significant Variation in Monthly Revenue Collection that can exceed $10 billion due to the state’s reliance on unpredictable capital gains taxes. The LAO still predicts $15 billion capital gains tax collections, despite a 25 percent decline in Silicon Valley stocks.
Newsom sought to distract from the grim financial report by holding a February 11 press conference to announce that he was pulling the 360 California National Guard troops deployed to the southern border by his processor to help with President Trump’s illegal aliens interdiction efforts. Newsom claimed the soldiers would redeploy to fight wildfires, despite CalFire reporting there are non contained fires after weeks of heavy rain and four feet of mountain snow.
When reporters asked Newsom if he was concerned pulling troops would cause a future backlash after the president already threatened to withhold $9 billion in FEMA supplemental relief to pay for November's Camp and Southern California wildfires his Administration blames on the state’s 2013 Road Rules forcing logging road closures.
He sneered in response, “Every day there’s new concerns.” When Newsom committed to a robust progressive tax and spend agenda at his inaugural last month, he also took time to criticize “President Donald Trump’s “corruption” and “incompetence.”