Posted Jan. 10, 2020; Updated Jan. 17, 2020
The Governor’s 2020-21 State Budget proposal relies heavily on positive three-year forecasts of corporation ($5 billion) and sales tax ($129 million) revenues to justify spending increases, but is still significantly reliant on Personal Income Tax revenues (67 percent of total revenues) as the sales tax base continues to deteriorate through the forecast period. Cities across the state have experienced similar behavior with their sales tax base. While sales tax revenues may remain steady through short-term forecasts, significant discussion is necessary on its long-term viability.
On economic and community development, the budget proposal continues the expanded $1 billion Earned Income Tax Credit (EITC) program for low-income Californians, a tax break for small business, and consolidates the workforce functions within the Labor and Workforce Development Agency into a new Department of Better Jobs and Higher Wages. While details on the functions of newly proposed department are not yet available, there may be opportunity to expand focus on workforce development and apprenticeships for local governments.