Higher-than-expected sales tax revenues in California through the first quarter of the year has been one standout piece of evidence that the economy there is back in a surprising way. Sure the state has its budget problems, but the fact that the economy seemed to be turning upward offered a hopeful sign that a solution could be found.
Well, hold the champagne.
According to the LA Times (via Gregor Macdonald), April sales tax receipts have plunged, unexpectedly, can celling out gains from the beginning of the year. State income fell a whopping 30% short of projections, or about $3 billion.
The bottom line is that politicians were kind of hoping they would have it easy and that a rebound would take care of itself.
But as Stephen Levy, director of the centre for Continuing Study of the California Economy, put it: “One pillar of the budget solution just got destroyed, and there’s nothing that can happen between now and June that can get back the $3 billion.”
Maybe Governor Schwarzenegger is rethinking is newfound opposition to offshore drilling?