$2.5 billion unexpected windfall for California


Since January projections, tax revenues continue at a strong clip. More people are working, buying things, and corporate taxes are up, based on numbers crunched by the Legislative Analyst Office.

An unexpected $2.5 billion surge in income and sales and use taxes has lawmakers hoping this is a sign the state's finances are improving. The windfall could help solve the remaining $14 billion budget deficit.

"It's great for the state of California. It's great news for our economy," said Assm. Bob Blumenfield, D-Los Angeles. "It means that things are starting to turn around a little bit. But ...")

The big "but" is whether the money will continue to come in above forecast to avoid deeper budget cuts.

Gov. Jerry Brown is preparing an updated budget proposal for release on May 16, but he will be on the conservative side, not counting on extra money coming in and still pushing to ask Californians to keep paying the expiring taxes for five more years for the long-term health of the state.

"He will continue to make his case for putting these temporary tax extensions before the people of California, not just because we have to deal with this year's budget gap, but also we have to deal with projected multi-billion dollar budget gaps in each of the next three fiscal years," said H.D. Palmer with the California Finance Department.

Republicans say the bump in revenue is further proof there's no need for Californians to pay the higher taxes beyond June 30.

"The extra $2 billion that we get means that it's a very manageable situation to get through this without reaching into the pockets of hard-working families that just can't afford it," said St. Sen. Tony Strickland, R-Thousand Oaks.

Even if Brown manages to get his tax extensions on the ballot, public school teacher Robin Greer from Cotati worries the public won't support them. She knows a $2 billion windfall is hardly enough to spare schools from cuts.

"Well, it makes me worry," said Greer. "It makes me worry that people are going to go, 'oh, they're finding money now. We don't need to do this.'"

The boon could be a boost for schools, too. Forty percent of any extra revenue collected after June 30 goes to schools, as mandated by California's education finance law known as Proposition 98.

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