The Governor’s initial 2016-17 budget proposal, released today, updates administration estimates of state General Fund revenues. In this note, we discuss the administration’s updated revenue projections through 2016-17. (We have not yet reviewed the administration’s multiyear budget estimates after 2016-17 or the separate Proposition 2 reserve calculations, which are complicated and are based on a particular calculation related to capital gains.) This note focuses only on the four largest state tax revenues (personal income, sales, corporation, and insurance taxes combined), which we call the “key taxes” below. Official budgetary documents often include other figures as “revenues,” such as Proposition 2 transfers that technically reduce revenues, so a focus on just these key taxes reveals the most important revenue assumptions underlying the budget estimates.
Changes Since 2015-16 Budget Act
The state’s 2015-16 budget plan—approved by the Legislature and the Governor in June 2015—was premised upon the administration’s May 2015 (“May Revision”) revenue projections. As shown below, for the state’s key taxes, the administration has lowered the budget act revenue assumptions slightly by $124 million for 2014-15 (the fiscal year that ended on June 30, 2015), while increasing key tax projections by $3.6 billion for 2015-16 and $2.2 billion for 2016-17.
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