Copyright© 2007 by School Services of California, Inc.

                                      Volume 20                   For Publication Date: February 16, 2007             No. 4

State Controller Weighs in on Revenue Outlook 

John Chiang, the new State Controller, offered his opinion on the outlook for state revenues in 2007-08. Noting that personal income tax receipts in January 2007 fell $1.3 billion below the Governor’s Budget estimate, the Controller offered that a weak housing market could be but one aspect driving the revenue slowdown. However, the Controller also acknowledged that there was some unexpected strength in other state revenues, partially offsetting the loss in personal income tax. The net shortfall for January is about $710 million, according to his office. 

The weakness in the personal income tax was previously reported by the Legislative Analyst’s Office, which noted that estimated payments for the fourth quarter of 2006 were well below the estimates. These payments largely reflect income from capital gains and stock options, as distinct from wage and salary income, which tends to be less volatile and easier to forecast. 

The Department of Finance has not yet released its accounting of General Fund revenues for the month of January. A spokesman for the Department indicated that staff were still evaluating the final collections from the other revenue sources. 

—Robert Miyashiro