Written by Gabriel Dillard
The slow drum beat of recession is looming in the Golden State.
If you have read the New York Times, Los Angeles Times or Sacramento Bee lately – or listened to Gov. Jerry Brown himself – you’ve heard that California is past due for a downturn. The indicators are there, including a slowing housing market and export pain from the China tariffs.
When the state’s homeowners sit down to do their taxes in early 2019, they will be capped at $10,000 for deductions of state income and property taxes because of the federal Tax Cuts and Jobs act.
Here’s another sign: State Controller Betty T. Yee announced on Friday that state revenue projections for October came up short. The state received $6.57 billion in revenue for that month, about 6 percent lower than anticipated, with a $412.2 million shortfall.
While October sales tax figures came in higher that projected in the budget enacted in June, personal income tax (PIT) and corporation taxes – two branches of the state’s “big three” revenue sources –were lower than projected.
PIT receipts were down 8.4 percent for October, and corporation taxes down 11 percent. That’s not a good sign from the state’s business community.
For the first four months of fiscal 2018-19, revenues continue to be higher than projected by 3 percent, or $1.02 billion. Total revenues are also up 8.1 percent compared to the same period in 2017-18.
As California prepares to seat a new governor in Gavin Newsom with his “expensive” agenda, signs point to a reckoning in the near future.
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