Another weak month for state tax revenue

California received $810 million less than expected in October, which means that since enactment of the Budget Act in June the shortfall is running about $1.5 billion. The budget package assumed that the state would receive $4 billion in additional revenue during the fiscal year. If it's determined next month that Sacramento has fallen $1 billion short, a series of sharp cuts covering social services and possibly education would be triggered. Some state analysts have downplayed these early revenue numbers, arguing that the bulk of the $4 billion to arrive after the first of the year. From the Sacramento Bee:

Assembly aides believe that the economy has stabilized since late summer, pointing to an exceptionally strong stock market in October and an improvement in gross domestic product estimates. That interpretation suggests Assembly Democrats are optimistic the state will avoid some or all of the trigger cuts. The state will make that determination in mid-December after the Department of Finance and the Legislative Analyst's Office release separate revenue forecasts for the remainder of the fiscal year.

In issuing its monthly report, the controller's office would seem to suggest as much:

The state has already added back more than 225,000 jobs since hitting bottom, and personal income has exceeded its pre-recession peak. Given that the labor markets continue to gain steam and that the third quarter of this year showed acceleration in real economic growth nationwide, revenues could become less turbulent as the recovery takes hold.