State says tax revenues critical to balancing budget

California’s franchise tax board begins to tally all those personal income tax returns today. KPCC’s Julie Small reports that money is more critical than ever to balancing the state budget.

California’s franchise tax board begins to tally all those personal income tax returns today. KPCC’s Julie Small reports that money is more critical than ever to balancing the state budget.

Julie Small: The health of California’s revenue stream rides on how much personal income tax the state pulls in. The Finance Department’s H.D. Palmer says that’s because sales tax – the state’s main source of income – has taken a dive.

H.D. Palmer: People aren’t buying as much. They’re out of work or they’re really paring back on their basic purchases or their discretionary purchases.

Small: Sales tax revenue fell 13 percent below projections in March. The drop has pushed the state $700 million in the red. Palmer fears it’ll get worse.

Palmer: We are still continuing to suffer job losses. In February the state lost more than 100,000 jobs. To visualize that, fill every seat in the Rose Bowl with a person and then some and that’s how many jobs were lost in California in just one month.

Small: H.D. Palmer says the attrition started in the construction industry and it’s spread to nearly every sector of California’s economy.

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