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Davis, California

Wednesday, December 8, 2021

California revenues fall $301.6 million below projections

State Controller John Chiang released his monthly report on Oct. 10, showing revenues came in $301.6 million below projections from the recently passed state budget, stated a press release from the controller’s office.

The total year-to-date general fund revenues are now behind the budget’s estimates by $705.5 million after accounting for September, stated the press release

If 2011-12 revenues are to reach their expected level, it is anticipated that the bulk of these revenues would be reflected in higher personal income tax, corporation-estimated tax payments and final return payments, which will be made from December 2011 through June 2012, stated the October California Department of Finance bulletin.

“At this point, we are developing our forecast of revenues for the current fiscal year and for the subsequent fiscal year, and this will be released in mid-November,” said Senior Fiscal and Policy Analyst for the California Legislative Analyst’s Office (LAO) Caroline Godkin in an e-mail.

The LAO and Finance Office will produce new revenue forecasts for 2011-12 based on economic and cash data in November and December. It is these forecasts that will determine whether the “trigger” budget reductions will be implemented, stated the bulletin.

“Trigger” cuts are a mechanism for reducing expenditures in 2011-12 if General Fund revenues are estimated to fall short of the amount contained in the 2011-12 budget act, stated the California Department of Finance Spending plan for 2011-12.

“For better or worse, the potential for revenue shortfalls is precisely why the Governor and Legislature included trigger cuts in this year’s State spending plan,” said Chiang in a press release. “September’s revenues alone do not guarantee that triggers will be pulled. But as the largest revenue month before December, these numbers do not paint a hopeful picture.”

The spending plan stated these cuts would occur in two tiers; the first, if revenues are forecast to be $1 billion below the budget level, and the second, if the revenue is forecast to be $2 billion below.

If tier 1 cuts were to go into effect, the University of California (UC) budget would be slashed by $100 million.

“I can tell you right now that if, in fact, the trigger does go into effect and the state withholds an additional $100 million from UC’s budget, we will not institute a mid-year tuition increase,” said Dianne Klein, media specialist for the UC in an e-mail. “If the cut goes into effect — a contingency we have planned for — UC will absorb it as it has the others in the past, through increased systemwide efficiencies, efforts to raise outside revenue and continued internal cost cutting.”

Klein also said, “We can’t absorb more cuts this way. We are down to the bone. Should the state disinvestment in the University of California continue, further tuition increases may occur.”

Klein said that at the last Board of Regents meeting, a multi-year budget strategy was discussed.

“If the state increased its funding to the UC by 8 percent next year, we would still need to raise tuition by 8 percent,” Klein said. “If the state gives us no new funds, we would need a 16 percent rise in tuition.”

No decision was made on the multi-year budget strategy at the meeting.

EINAT GILBOA can be reached city@theaggie.org.

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