Monday, February 13, 2012

California's January Tax Revenue was $528M Below Estimate

More and more data continues to come in which indicates that the media narrative about the economy being on the upswing, fueled in large measure by the January month jobs report from the Bureau of Labor Lying statistics and the booming of the horrendously manipulated stock market, is a flat out falsehood. Just in the past week there have been reports that American gasoline consumption is cratering along with the Baltic Dry Index (which measures global shipping rates), indicating a massive slowdown in the economy. And now comes word that taxes revenues in the nation's largest state also went into free fall in January. Here is Bloomberg with the details:
California collected $528 million less in taxes in January than Governor Jerry Brown estimated in his latest budget, Controller John Chiang said.

The majority of the shortfall was in income taxes, down $525 million, or 6.3 percent less than projected in the spending plan Brown released Jan. 5, Chiang said. Corporate taxes were down $127.9 million, while sales taxes were up $42.8 million.

California’s cash may be exhausted by March, Chiang reported Jan. 31. The nation’s most populous state will need $3.3 billion by mid-April without additional borrowing and payment delays, because it has spent more and received less than anticipated for the current fiscal year.

“January revenues were disappointing on almost every front,” Chiang said today in a statement. “Thankfully, the decisive actions taken recently by the state to stabilize its cash flow will ensure that California can pay its bills through the end of the fiscal year.”
Love that bit of FlackSpeak there at the end by Controller John Chiang. "Stabilizing cash flow" actually means "massive budget cuts," but obfuscation has now become official policy just about everywhere.

If the economy really is recovering as the pundits would have you believe, why did California's income tax collections plummet by over half-a-billion dollars in just one month? That sounds like either, a) people are losing their jobs in large numbers again, b) wages and salaries are declining rapidly, or c) all of the above. Combined with the gasoline usage data and the BDI numbers, it also sounds like the economy is on the brink of a major crash.

So what does California plan to DO about this depressing state of affairs? Oh, the usual same old tired bullshit:
Treasurer Bill Lockyer plans to obtain as much as $1 billion from Wall Street to ease the shortfall. Lawmakers passed a bill to let the state borrow $865 million from internal accounts to avert a cash shortage.
That's their strategy: borrow, borrow and borrow some more until you can't borrow so much as another nickel. And that, my friends, will be the end game, not just for California, but for America as a whole.

Bonus: Well, if nothing else this story gave me the excuse to play some Social Distortion


  1. I wonder why with the obvious reduction in income that sales tax receipts increased?

    1. People putting more money on the plastic, I would imagine.

  2. Be careful with the use of that term "end game." California's borrowing from "Wall Street" which is the first piggy at the trough of Federal Reserve "asset creation" and printing, and the printing hasn't even started. My old man lived through the Wiemar period in Germany and the game wasn't over there in the 20's, when he was using 1,000,000 Mark notes to buy bread. Things haven't begun to collapse here.

  3. We can expect the pretense of the game to continue indefinitely.

    However, if wise planning for a radically different future is your thing, it's clear there is no sense in pretending we can continue on with life as we know it.

    There is certainly a lot of sense in making major course corrections now, and assisting others who seek help to do this as well.

    What's the point of using examples from history in a way that some will undoubtedly misconstrue as an excuse for inaction and postponing change?