“Where is the growth in sales tax transactions?” asked California ControllerJohn Chiang in his monthly report on the Golden State’s cash balance.
Calling growth in the state’s sales tax receipts “weaker than expected in recent months,” Chiang said he was surprised, “given the improvement in the State’s other major revenues and the economy in general.”
Even in earlier recession years consumers spent enough — on cars, clothing, furniture and in restaurants, for example — to push sales tax growth to 7.8 percent per year between 2011 and 2012.
“Car sales — the single-largest identifiable part of the sales tax base — grew at nearly double the rate of the overall tax base,” Chiang said. “But sales were weaker for retailers of gasoline, electronics, and general merchandise.”
In May 2014, sales taxes fell $98.6 million short of estimates made in Gov. Jerry Brown‘s budget. That, combined with a $254.2 million shortfall in personal income taxes and a $177.6 million shortfall in corporate taxes, pushed California’s cash receipts in May to $530.4 million below the governor’s guesses.
“May was disappointing for the State of California’s revenues,” said Chiang.
Nevertheless, year-to-date revenues were still $1.8 billion, or 2.1 percent, ahead of budget guesses.
Steven E.F. Brown is web editor at the San Francisco Business Times.