April Revenues Skyrocket

Preliminary figures from the Franchise Tax Board indicate that General Fund revenues for the month of April will far exceed the Administration’s predictions. Indications are that revenues could be as much as $2 billion over the estimated level of collections projected in the January Governor’s Budget.
 
April is the most significant month for state tax collections, with payments for personal income tax liabilities in 2005 due April 17. The Governor’s Budget assumed approximately $12.5 billion in General Fund collections for the month of April. Thus, collections reaching $14.5 billion would imply a 16% increase over this estimate. Coupled with the $1 billion in higher revenues from earlier months, April receipts would set the stage for a positive May Revision next month. It is possible that the May Revision will recognize more than $3 billion in added revenues in the current year.

There are growing signs that the broader state and national economies will face greater hurdles in the months ahead. Economists have been closely watching the energy markets in recent weeks, as oil has traded for more than $75 per barrel and gasoline has sold for more than $3 per gallon in California. The underlying concern is that higher energy prices will force an uptick in prices generally and spark fears of inflation, which has not been a significant concern lately.