Monday, March 23, 2020

"COVID-19 and California’s Evolving Fiscal Outlook"

From the California Legislative Analyst's Office:

....Volatile Financial Markets Indicate Lower Capital Gains-Related Tax Revenue
Taxes on capital gains are a significant source of state revenue. Even in “normal” times, capital gains income is difficult to forecast because it correlates with stock market performance. The Governor’s budget projected tax revenues from capital gains income of about $30 billion across 2019‑20 and 2020‑21. This estimate assumed that the average price level for the S&P 500 stock index would remain relatively flat from late 2019 through the first half of 2020, with gradual price appreciation thereafter. Similar to our November Fiscal Outlook, the Governor’s budget acknowledged that a market correction represented a significant downside risk to the forecast....

Yes. Not a lot of capital gains to be booked in the immediate future.