California's revenue for September missed the state's budget projection by $301.6 million, raising the prospect that spending cuts could be triggered early next year, the state controller said on Monday.
For better or worse, the potential for revenue shortfalls is precisely why the governor and Legislature included trigger cuts in this year's state spending plan, Controller John Chiang said in a statement.
September's revenues alone do not guarantee that triggers will be pulled. But as the largest revenue month before December, these numbers do not paint a hopeful picture, Chiang said.
Governor Jerry Brown and lawmakers crafted a budget in June that closed a $10 billion deficit with cuts, payment deferrals, some fees, and expectations of $4 billion to be generated by California's slow recovery from its long and brutal slump.
The plan also had provisions for spending cuts, including deep cuts to school spending, to be implemented after December if revenue falls short of expectations.
Revenue from the start of the current fiscal year in July through September is trailing budget estimates by $705.5 million, Chiang said.
Analysts said the trajectory of California's revenue strongly suggests leaders will have to trim yet more spending to keep the books balanced.
It's pretty clear the state is dealing with an entirely different type of budgetary reality than even a few months ago, said Dan Schnur, director of the Unruh Institute of Politics at the University of Southern California.
Chiang's office in a report said September's revenue highlighted an uneven economic recovery.
Personal income taxes posted solid gains in September, driven in large part by total personal income, which has finally exceeded its prerecession peaks according to data from the Bureau of Economic Analysis. However, both sales and corporate taxes disappointed, the report said.