The state stands out because it's big and, well yes, horribly governed. But California isn't all that different from the other states struggling to cope with a huge revenue loss from personal income taxes. Almost everybody has taken a big hit, according to the Nelson A. Rockefeller Institute of Government (the exceptions being Utah, North Dakota and Alabama). Also, California is hardly the only state that relies heavily on personal income tax revenue. In six states - Colorado, Connecticut, Massachusetts, New York, Oregon, and Virginia - PITs made up over 50 percent of total tax collections (California is at 47.5 percent). The state with the biggest percentage decline in personal income tax revenue for the first four months of 2009 was Arizona, at 54.9 percent. California was fourth-highest, at 33.8 percent.
The Institute's newsletter gets into why the April shortfalls are such a big problem - in California and elsewhere:
By the time it is recognized in late April or mid-May, it is just 6-10 weeks before the end of the fiscal year for 46 states. For states without large cash balances, this can create a cash flow crunch or even a cash flow crisis. There is not enough time to enact and implement new legislation cutting spending, laying off workers, raising taxes, or otherwise obtaining resources sufficient to offset the lost revenue before the June 30 end of the fiscal year. As a result, a state without sufficient cash on hand to pay bills must resort to stopgap measures to "roll" the problem into the future.
Here's the list of states with the biggest decline in personal income taxes for the first four months of the year.
South Carolina -38.6%
New York -31.8%
Rhode Island -30.4%
New Jersey -30.1%
United States -26.0%