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California's Tax Revenues Fall $600m Below Target

by Leroy Baker, Tax-News.com, New York

17 February 2004

California’s tax revenues fell more than $620 million below Governor Arnold Schwarzenegger’s target in January, although government officials have been quick to allay fears that the state’s economy had taken a fresh nosedive.

According to H.D Palmer, a spokesman for the Californian finance department, the $626 billion shortfall can be largely attributed to retailers missing the January 31 deadline for paying their final fourth-quarter sales taxes.

"Is the economy going off a cliff? The answer is no," Palmer reassured, adding: "It looks worse than it is.”

"We don't believe this reflects any underlying weakness or erosion in the state's economy."

The state’s total tax take in January equalled $7.236 billion, 8% lower than the $7.862 billion forecast in Schwarzenegger’s budget for 2004/2005, which has proposed reducing the state budget deficit through a combination of spending cuts and a $15 billion bond issue.

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