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File: California Gov. Jerry Brown announces his public employee pension reform plan October 27, 2011 at the State Capitol in Sacramento.
The nonpartisan Legislative Analyst's Office's revised forecast says California tax revenues will come in $6.5 billion below Gov. Jerry Brown's budget forecasts. If the legislative analyst is right, lawmakers will have to find billions more in budget cuts and other solutions.
The spread would be $2 billion larger, if not for Facebook’s initial public offering that’s expected this spring. The legislative analyst thinks California could net $2 billion from the largest stock sale in history.
Most of the daylight between the governor's and the legislative analyst’s projections boils down to how they project taxes from personal income. California gets half its revenues from personal income--most of that from the 1 percent of residents who earn more than $150,000 a year.
It’s hard to predict how much the group will owe in taxes, because it’s tied to financial markets “that can turn on a dime.” The legislative analyst projects much smaller returns from personal income tax than the governor's team.
They say that’s based in part on estimated tax payments made in December and January that were $700 million lower than last year.