Good tax news brings more questions

SACRAMENTO -- By now it’s a safe bet that California tax revenue will surpass expectations during the current fiscal year. But the question of what that means for the state’s bottom line is far from settled.

California has reaped more than $10.1 billion in income taxes so far in April and could see another $2 billion before the month is over, according to updated figures from Legislative Analyst’s Office. This week had two of the biggest collection days in state history.

The analyst’s office said the state only needed $8.5 billion in April to keep pace with projections. Depending how the next two months pan out, California tax revenue could wind up being a few billions dollar more than expected in the fiscal year, which ends on June 30.

None of this, however, means lawmakers and Gov. Jerry Brown are guaranteed to have more money to play with while they’re hashing out the state’s next budget.

The Legislative Analyst’s Office cautions that much of any surplus would be gobbled up by the state’s constitutional school funding formula known as Proposition 98. A recent report said higher revenues “could have substantial benefit for schools and community colleges but provide little, if any, benefit for other state programs.”

There are also questions about whether Californians, fearing federal income tax hikes, cashed out investments early. If they did, the state could be seeing a revenue spike for now but lower totals in the next fiscal year.

The governor is scheduled to release his revised budget proposal in May and everyone “will have to make difficult judgments” about how much tax revenue to count on, the Legislative Analyst’s Office said.

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Twitter: @chrismegerian