California’s COVID-Resistant Tax Revenues

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

October General Fund tax revenues came in 37 percent above the 2020-21 Budget Act forecast, according to the latest Finance Bulletin from the California Department of Finance. Revenues through the first four months of the current fiscal year now exceed forecast revenues by $11 billion:

Revenue collections from March, when the state’s COVID-19 state of emergency was declared, are just 1.3 percent below the same period in 2019, which was a record year. That’s despite an 11 percent unemployment rate, which exceeds the national 6.9 percent unemployment rate by >50 percent.
Don’t blame DOF for an inaccurate forecast. California’s tax revenues are heavily dependent on capital gains derived from inherently unpredictable stock markets that could — and one day will — go the other way. That’s why the legislature and governor must gain control over the pension and other retirement spending that is crushing state services even in good times:

COVID hasn’t altered that spending. Only the legislature and governor can do that.

Comment on this article

Please note, statements and opinions expressed on the Fox&Hounds Blog are solely those of their respective authors and may not represent the views of Fox&Hounds Daily or its employees thereof. Fox&Hounds Daily is not responsible for the accuracy of any of the information supplied by the site's bloggers.