California State Budget Deficit for 2012-13 is Increasing vs. Projections
A summary of California State Finances for August 2012 looks like this:
Except for corporate income taxes (down a whopping 71.5% vs. projections), the state is doing better in August than budgeted.
However, compared to a year ago, revenues are down, sales taxes are down, and corporate taxes are down, all by significant amounts.
Moreover, the two-month totals for July and August are much worse as the following table shows.
General Fund Receipts July-August 2012
For July and August, sales Tax Collections are $108 million under budget. August sales tax collection is down 20% from a year ago, a huge decline of $633 million.
This clearly shows people in California have cut back spending. I suggest people have cut back in other states as well, regardless of reported increases in retail sales, typically based on the flawed methodology of “same store sales“.
Sales tax collections show the real story, and the real story is “recession”, the reason for Fed Panic!
Spending Nearly $3 Billion Over Budget!
For the complete report, please see Statement of General Fund Cash Receipts and Disbursements
So California, what are you going to do? Cut spending or hike taxes? I suggest spending is way out of control and retail sales will continue to disappoint.
About the author: Mike “Mish” Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management. His top-rated global economics blog Mish’s Global Economic Trend Analysis offers insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.