California collected $15.03 billion in revenue in April, putting the state's fiscal year-to-date revenue at $4.6 billion above the estimates in Governor Jerry Brown's initial budget plan, the state controller's office said on Wednesday.
Overall revenue in April missed the budget estimate by $119.9 million, but was up $5.4 billion from the same month a year earlier - an increase of 55.9 percent - propelled by rising incomes and consumer spending, State Controller John Chiang's office said in a report.
"On balance, California's fiscal health has improved materially and the state is beginning to turn the corner," the report said.
The report came a week ahead of Brown's expected release of his revised budget plan for the state's fiscal year beginning in July. The new plan will incorporate the latest revenue information.
In his initial budget plan, Brown projected deficit-prone California's budget could swing to surpluses as the economy improves, and if lawmakers support his efforts to restrain spending.
State and independent budget analysts have also been expecting the most populous U.S. state's revenue to improve after voters in November approved a measure pushed by Brown to raise the state's sales tax and personal income-tax rates, retroactive to last year, on wealthy taxpayers.
Additionally, federal income-tax changes that went into effect in January may have spurred many California taxpayers to sell investments last year. The rising stock market may also be propelling capital gains revenue for the state.
Personal income taxes are California's most important source of revenue. The state has historically relied on its wealthy taxpayers to provide much of those taxes.
BREAKING INTERNAL BORROWING STREAK
April marked a milestone for California's finances, according to Chiang.
"For the first time in nearly six years, we closed out a month without borrowing from internal state funds to pay our bills," Chiang said in a statement.
Even so, California faces "significant debt that must be shed before we can claim victory, and these unanticipated revenues provide us with an important opportunity to take further steps toward long-term fiscal stability."
In January, Standard & Poor's upgraded its rating on $73.1 billion of California's general obligation bonds by one notch to A from A-minus in part due to the state's improving finances and projected balanced budgets.
S&P also upgraded California because Brown plans to largely retire the state's backlog of internal loans and deferred payments - one-time moves the state has used to help close budget gaps and bolster its finances.
Brown estimates the cost of those moves, which he calls "The Wall of Debt," at nearly $28 billion.
The governor wants to reduce that to $4.3 billion over the next four years, an effort that would put California's finances on considerably stronger footing if the state runs into a revenue slump and needs to borrow from its internal funds, S&P analyst Gabriel Petek said.
© 2022 Thomson/Reuters. All rights reserved.