California drew in 11% less in personal income tax revenue than it expected so far this year, the latest warning sign for the finances of a state whose fortunes are closely tied to the performance of markets.
Total revenue collections through August, which is the second month of the 2022-2023 fiscal year, came in about 8% below the forecast, according to a
"Shortfalls in August continued to be largely driven by lower proceeds from personal income tax, however, the month also saw lower proceeds from sales and corporation taxes," the bulletin said. August isn't a significant month for personal income tax collections, according to the finance department.
California is prone to booms and crippling deficits because of its dependence on high-wage earners, and some of the state's once high-flying companies have been laying off workers as economic headwinds mount.
While Silicon Valley giants such as Apple Inc. and Alphabet Inc. have indicated that they're slowing their pace of hiring, companies from Netflix Inc. to Lyft Inc. have fired workers as economic headwinds mount. California was also one of 16 states to see its unemployment rate tick up in August, reaching 4.1%, according to U.S. Bureau of Labor Statistics data released on Friday.
The Golden State's revenue miss adds to signs around the country that governments' revenues may be curtailed by a decelerating economy. However, the state has already socked away billions to cover the hit of the next downturn, with lawmakers pouring $37.2 billion into its reserves in its latest spending plan.
— With assistance from Romy Varghese
