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December 8, 2012

[Updated] About Proposition 30 and the report on November California state revenues

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California State Controller John Chiang recently released a report on revenues collected by the State of California for the month of November 2012.

Revenue was dramatically below projections in the 2012-2013 state budget as proposed by Governor Jerry Brown and approved by the California State Legislature.

A bunch of folks immediately started hollering that this shortfall was “desipite the passage of Proposition 30.”

Proposition 30, approved in the November election, was Governor Brown’s tax increase to stabilize the state budget.

I opposed Proposition 30, but I cannot allow the statements about November’s state revenue shortfall to mislead readers into believing that the shortfall was “despite Proposition 30.”

Why is the shortfall not “despite Proposition 30?”

Because the Proposition 30 tax increases do not take effect until January 1, 2013.

Supporters and opponents alike will have to wait until next year to see of Proposition 30 will fulfill the governor’s stated goal without further crippling the state’s economy.

Opponents will likely have to wait longer to see if the State legislature — now dominated by a Democratic supermajority — can control its impulse to spend more.


After reading comments on this and an earlier related post, and discussing the matter with another staff member, I realized that I had railed to take into account any increased income tax withholding resulting from Proposition 30. I do not, in fact, know whether employers were required to apply the increased rate on November paychecks.

In any case, after reading the Controller’s  summary analysis I have decided that the biggest drag on November revenue was a drop in corporate taxes.

Facebook also plays a part, in that a larger chunk of state income from its initial public offering (IPO) was received in October rather than November, as the state budget projected. The Facebook IPO plumped October revenues, then thinned November revenues, when compared to budget projections.

Overall, the Controller says that California state expenses continue to exceed revenue by about 1.6% for the current fiscal year.

That’s less dramatic than a single month’s drop of 10.8%, and it can still run the state into the ground.

But again, the full effect of Proposition 30 will wait for 2013.

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About the Author

Shelley Henderson is a reformed computer and networking geek turned freelance writer. Now she only fixes her own networks and computers. That leaves time for writing, and writing and more writing. And editing the Orange County Breeze. Shelley most enjoys visiting and finding out about local businesses to write business profiles that allow our communities to learn more about their local businesses and the people who own and run them. If you own or manage a business in our coverage area and would like to invite Shelley to write a business profile, let us know.


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