May Revise is on the Horizon

Governor Newsom has a history of releasing his revised budget on May 14th each year. This "May Revise" is a revision of the state budget he released in January, with the final budget adopted in June. As May Revise approaches, staff at EveryChild California has their ear to the ground, listening for signals about what we should expect once the revised Governor's budget is released. While we're bracing for a strained budget, there was a glimmer of hope recently highlighted by Jason Sisney, a California budget advisor, in his personal Substack (an online newsletter readers can subscribe to). 

According to Sisney's analysis, income tax collections, which include both personal income tax and corporate income tax, came in $3.3 billion over the original forecast of $30.5 billion. While this seems like a windfall, it's important to remember that this figure may be adjusted as more information comes in. For example, June is another high-collection month, and actual collections could impact the final budget depending on how they compare to forecasts. Additionally, California has constitutional obligations to fund the state's rainy day fund as well as our schools and community colleges, which limits how this revenue can be used. 

Still, the hope is that stronger-than-expected state income, combined with a robust stock market, will put California in a healthier budgetary position heading into final budget negotiations. The reality, however, remains complicated. Inflation continues to impact all of us, including the state, and the ongoing threat of federal funding cuts creates unpredictable pressures that could significantly affect California's bottom line. These uncertainties mean we can't count on good news just yet. Even so, we at EveryChild California remain cautiously optimistic that this is a sign of healthier California budgets to come!