Controller Steve Westly released new data today showing that state revenues are $2 billion ahead of where they were this time last year. It's good news, but likely not enough good news to solve the fiscal problems that are just around the corner.
Westly's report shows the increased cash flow comes from higher sales tax, personal income tax, and corporate tax revenues.
So what does this mean? Obviously, it's good news. But compare those numbers to the September analysis from the non-partisan Legislative Analyst, Elizabeth Hill. Her office continues to estimate a structural deficit in 2005-2006 of $6 billion, increasing to $8 billion in 2006-2007. The LAO is scheduled to release new projections later this month.
As recent as last week, Governor Schwarzenegger admitted that the higher revenues are being outpaced by higher spending, much of it contained in formulas that are already in place.
But most budget watchers still want to know whether these higher revenues are a true sign of a recovering California economy. And Schwarzenegger is still essentially betting that a strong economy will erase the state's red ink.
"The state is doing really, really well," he said eight days ago when introducing his new Finance Director, Tom Campbell. "I am absolutely convinced, you know, that we are pulling out of this fiscal crisis."