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State taxes coming in $4B above forecast
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SACRAMENTO (AP) — California is on track to collect $4 billion more in personal income taxes than Gov. Jerry Brown had expected, giving a potential boost to education funding, the legislative analyst's office said Tuesday.

The state has been posting strong tax collections so far this fiscal year, which ends June 30. The analyst's office noted that tax collections continue to be robust even after the April 15 tax filing deadline. That comes on top of a strong revenue month in January.

On Tuesday, the state collected $678 million after refunds, an unexpectedly strong figure. Personal income taxes are the state's largest revenue source, and April is generally the biggest revenue month of the year.

Even so, Brown cautioned that the extra money might already be committed, and a state finance official said some could be from early tax withholdings.

The governor and the legislative analyst noted that much or all of the extra revenue will likely be required to go to public schools and community colleges under Proposition 98, the state's education funding formula.

"We have a very complicated mechanism called Prop. 98, and depending upon how the money flows, it may not be as available as many people are now thinking," Brown told reporters Tuesday.

The Brown administration is interpreting the state's rules in a way that would require as much as 90 percent of extra revenue go toward public education, said Edgar Cabral, an education expert with the legislative analyst's office.

"You're looking at $3.5 billion or more would be required to be allocated to schools and community colleges to meet this higher Prop. 98 requirement," Cabral said in an interview.

The analyst's office also cautioned lawmakers not to spend the extra money on ongoing education programs. Instead, it is recommending the state pay down education debt and past obligations to schools.

"It will be additional money for schools, but it may not necessarily mean that schools are going to go right ahead and then start hiring additional teachers, because it could be one-time in nature," Cabral said.

In January, Brown included additional revenue from Proposition 30, the tax initiative approved by voters last fall, in his proposed $97.6 billion general fund budget for the 2013-14 fiscal year. His upcoming budget wipes out years of deficits and even includes a modest surplus.

That compares with a deficit of $25 billion when Brown took office two years ago.