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Tax plan would generate billions less than thought, analyst says

January 9, 2012 |  3:44 pm

Gov. Jerry Brown’s tax measure could bring in billions less than what the governor is counting on, according to a new analysis from the nonpartisan state legislative analyst.

Brown, who hopes to put a measure before voters to temporarily increase levies on upper earners and hike the state sales tax, says his initiative would generate nearly $6.9 billion annually over the next five years to help close the state’s budget deficit. But the Legislative Analyst's Office says the plan would bring in only $4.8 billion in the 2012-13 budget year and about $5.5 billion in following years.

The wide discrepancy is the latest split over numbers between the administration and the Legislative Analyst's Office. Last November, the Legislative Analyst's Office released a revised estimate for the state’s current budget picture. Less than a month later, Brown’s department of finance came back with estimates that were $1.5 billion higher than the Legislative Analyst's Office numbers.

In its analysis Monday, the Legislative Analyst's Office said that predicting just how much Brown’s tax measure would bring in is difficult because it is dependent on income taxes from upper earners. That money varies wildly from year to year.

“Their capital income is highly volatile from one year to the next,” the analysis states. “For example, the current mental health tax on income over $1 million generated about $734 million in 2009‑10 but has raised as much as $1.6 billion in previous years. Given this volatility, estimates of the revenues to be raised by this initiative will change between now and the November 2012 election.”


Read Gov. Jerry Brown's budget proposal

California in retreat on social service spending

Gov. Jerry Brown's new budget plan targets schools

--Anthony York in Sacramento

Photo: Gov. Jerry Brown discusses his proposed $92.5-billion 2012-13 state budget at a Capitol news conference Jan. 5, 2012. Credit: Rich Pedroncelli / Associated Press