California
If California extends state tax deadline to October like the IRS, can it still pay its bills?
From across the mid-Nineteen Eighties via 2014, the state routinely borrowed cash from outdoors sources to cowl short-term imbalances between revenues and expenditures. Throughout the fiscal disaster of 2009, it even needed to situation IOUs to pay some distributors, native authorities companies and taxpayers awaiting refunds.
However due to good financial situations, larger tax charges and new legal guidelines, consultants say California has sufficient inside sources to tide it over till Oct. 16 if the FTB postpones deadlines and most of the people who owe cash wait that lengthy to pay.
“It’s unlikely that pushing deadlines to October would lead us to working out of cash to pay the payments,” mentioned Brian Uhler, a deputy analyst with the California Legislative Analyst’s Workplace. However “it might make it tougher for the Legislature to place collectively the finances plan in June.”
Suspending tax deadlines till October would push tens of billions of {dollars} from the 2022-23 fiscal yr, which ends June 30, into 2023-24. “The primary influence of extensions can be prolonging the uncertainty policymakers are already going through round what revenues they’ll should work with within the coming fiscal yr,” Moody’s analyst Emily Mandel mentioned in an e-mail.
The private earnings tax makes up about 61% of state normal fund revenues. This contains taxes from people and from sole proprietorships, partnerships, S companies and restricted legal responsibility firms that file enterprise earnings on private tax returns.
About 70% of non-public earnings taxes arrive year-round through payroll withholding and can be unaffected by a deadline change. “That cash we’re nonetheless getting,” Uhler mentioned.
The remaining comes from funds folks make once they file their tax returns and from estimated tax funds that many individuals with enterprise, funding or retirement earnings make 4 occasions a yr. (In most years, folks can file a federal or state tax return as late as mid-October, however nonetheless should pay any taxes due by the April deadline or danger getting a late-payment penalty. The IRS announcement delays each the submitting and cost deadline till Oct. 16.)
State finances watchers maintain an in depth eye on April receipts as a result of they sometimes account for 15% to 19% of complete private earnings tax revenues, in keeping with the California Division of Finance. Final yr, the state collected $25 billion in April.
In January, the IRS gave folks dwelling in federally declared catastrophe areas that coated most of California (together with each Bay Space county) and elements of Georgia and Alabama a bit extra time.
It gave these folks till Might 15 to file their 2022 tax returns and make funds that might have been due April 18, and to make quarterly estimated tax funds usually due in January and April. The brand new deadline additionally utilized to numerous enterprise returns usually due on March 15 and April 18.
The FTB conformed to those self same deadlines for California taxes.
On Friday, the IRS threw the state an even bigger curveball. It postponed not solely these deadlines, but additionally the deadlines for estimated funds due in June and September, till Oct. 16.
The FTB says it’s reviewing the most recent IRS announcement and when it has info to share, will publish it on ftb.ca.gov.
Earlier this yr, the state estimated that the shorter postponement till Might 15 “might shift about $20.9 billion of mixed January-April tax income into Might,” together with a $19.3 billion shift in private earnings tax, David Hitchcock, a senior director with S&P International scores, mentioned in a report.
California has all the time confronted cash-flow imbalances as a result of it has to pay payments all yr however its revenues are lumpy. Earlier than 2015, it normally borrowed cash from traders by promoting income anticipation notes or RANs early within the fiscal yr and paying them off late within the yr, after the majority of tax revenues had are available in.
Since then, two actions “helped to extend the state’s money cushion” and made RAN issuance pointless, H.D. Palmer, a spokesman for the state finance division, mentioned through e-mail. In 2009, the Legislature handed a number of legal guidelines that broadened the record of “internally borrowable funds.” In 2014, voters handed Proposition 2, which up to date the foundations governing the Funds Stabilization Account (higher often known as the wet day fund) and created the Public Faculty System Stabilization Account. It additionally made these reserves accessible for borrowing.
“These two actions — mixed with vital income will increase lately and prudent finances and money administration insurance policies — have meant that the state has had ample sources readily available which have made exterior money movement borrowing pointless,” Palmer mentioned.
On the finish of January, the state had $32.7 billion generally fund money and $126.5 billion in unused borrowable sources. If the state have been to push the tax cost deadline into October, “It’s actually our hope and expectation that our traditionally excessive money sources will proceed to be enough in order that RANs won’t should be issued,” Palmer added.
In California, the highest 1% of taxpayers account for about half of non-public earnings tax revenues, and they’re more likely to pay in October if the FTB lets them. “The individuals who pay the millionaire’s tax will most likely defer,” mentioned Karen Krop, senior director at Fitch Rankings (which like The Chronicle is owned by Hearst Communications).
She and Hitchcock confused that any deferral would have an effect on the timing, however not the quantity of tax revenues collected. The massive influence can be on budgeting.
“With the inventory market down and tech exhibiting some pressure, however on the identical time wage development nonetheless sturdy, California’s already in a troublesome setting for forecasting earnings tax revenues,” Mandel mentioned.
An October tax deadline “would additionally make it tougher for (lawmakers) to make particular coverage adjustments,” mentioned Chris Hoene, govt director of the California Funds & Coverage Heart.
For instance, if the state needed to develop entry to meals help or well being care at a value of $50 million a yr, although it’s not an enormous quantity, it is perhaps exhausting to do as a result of the “knee-jerk response can be let’s say no to something that provides to expenditures” as a result of there are “simply too many unknowns,” Hoene mentioned.
This isn’t the primary time tax deadlines have been prolonged. In 2020, federal and state tax deadlines have been delayed till July 15 for everybody due to the pandemic, however that was solely half a month into California’s new fiscal yr. State earnings tax funds acquired in July 2020 “have been scored on a budgetary foundation” as having been acquired in fiscal 2019-20, which ended June 30, 2020, Palmer mentioned.
Attain Kathleen Pender: kathpender84@gmail.com; Twitter: @KathPender
California
California woman dies from Fresno County's first human case of rabies in more than 30 years
A California woman died of rabies after allegedly being bitten by a bat in her classroom, according to Fresno County health officials.
The woman, later identified as Leah Seneng, 60, marks the first human case of rabies in Fresno County since 1992.
“In general, rabies is a disease that affects the brain, and it is very rare. But when it develops, it can cause very serious consequences,” said Dr. Trnidad Solis, Fresno County Health Department’s deputy health officer. “It’s transmitted through saliva; it is not airborne.”
RABIES PATIENT BECOMES FIRST FATAL CASE IN US AFTER POST-EXPOSURE TREATMENT, REPORT SAYS
Seneng, who was an art teacher at Bryant Middle School in Dos Palos, was bitten by the bat when she was attempting to rescue it in her classroom, local outlet ABC30 reported.
She first came into contact with the bat in October, but did not display symptoms until approximately a month later, according to Fresno County health officials. She was admitted to the hospital and died four days later.
PEANUT THE SQUIRREL EARMARKED FOR EUTHANASIA BEFORE BEING CONFISCATED AND WAS RABIES-FREE: REPORT
“The most frequent route of transmission is through the bite of an animal that has rabies. With rabies, unfortunately, there is no cure. So, when symptoms develop, there is no treatment, and often when it develops, it is often fatal. So we want the public to know that prevention is key to preventing rabies infection,” Solis said.
Fresno County officials do not believe there is a threat to public health at this time, but are working with the Merced County Health Department to identify any other possible exposures and administer vaccines.
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Seneng’s coworkers have set up a GoFundMe account to assist her family during this time.
California
Another batch of raw milk from a trendy California brand just tested positive for bird flu
- Two batches of raw milk from a trendy California brand have tested positive for bird flu this week.
- Bird flu has been spreading rapidly among cattle in the US.
- Experts say drinking raw milk is dangerous, and can cause food poisoning.
Another batch of raw milk just tested positive for bird flu in California.
Last Sunday, Fresno-based Raw Farm voluntarily recalled a first batch of cream top whole raw milk with a “best by” date of November 27. By Wednesday, the California Department of Public Health announced that a second batch of Raw Farm cream top, with a “best by” date of December 7 had also tested positive for bird flu, based on retail sampling.
“We’re not making a big deal about it, because it’s not a big deal,” Kaleigh Stanziani, Raw Farm’s vice president of marketing, said in a short video posted on YouTube after the farm’s first voluntary recall was announced earlier this week.
She said there had only been an indication that there might be a “trace element of something possible,” emphasizing that there had been no reported illnesses of Raw Farms cows or positive tests from the cattle.
Raw Farm owner Mark McAfee later told the LA Times that the California Department of Food and Agriculture had requested that his company “hold delivery of further products” until Friday, after conducting thorough testing of two Raw Farms and one creamery on Wednesday. (McAfee could not immediately be reached for comment by Business Insider during the Thanksgiving holiday.)
Raw milk may be helping bird flu spread — but not in the way you might think
Scientists suspect that cross-contamination of raw milk between animals may be one reason the H5N1 virus is spreading rapidly among cows in the US — and could even contribute to the human spread of the virus. The Centers for Disease Control and Prevention cautions that dairy workers might be able to contract bird flu by infected raw milk splashed into their eyes.
There is no definitive evidence yet that humans can get bird flu from drinking contaminated raw milk. Instead, health authorities generally recommend avoiding raw milk because of other serious health risks, including food poisoning with bacteria like Salmonella, E.coli, or Listeria.
There are no known health benefits of drinking raw milk. Instead, all evidence suggests that pasteurized milk is just as nutritious, and is safer to consume.
Still, raw milk has become a trendy product among some influencers. Gwenyth Paltrow says she has it in her coffee in the morning.
Robert F. Kennedy Jr., President-elect Trump’s pick for Health and Human Services secretary, says he wants the US Food and Drug Administration to stop its “war” against raw milk.
Over the summer, “Carnivore MD” Paul Saladino released a raw milk smoothie in partnership with the elite Los Angeles health foods store Erewhon featuring unpasteurized (raw) kefir from Raw Farms, and powdered beef organs.
California has some of the loosest rules around raw milk in the country; it’s generally fine for California retailers like health foods stores and grocers to sell it, raw milk products just can’t be transported across state lines, per FDA rules.
Michael Payne, a researcher at the Western Institute of Food Safety and Security, told The Guardian that people consuming Dr. Paul’s $19 smoothie were “playing Russian roulette with their health,” and ignoring pasteurization, “the single most important food safety firewall in history.”
California dairy farms have been seeing an uptick in bird flu cases since August. The state has reported 29 confirmed human cases of bird flu, and all but one of those was sourced back to cows.
Last week, the Centers for Disease Control and Prevention reported the first confirmed case of bird flu in a California child from Alameda County. The child had no known contact with infected farm animals, but may have been exposed to wild birds, the California health department said in a statement.
The child had mild symptoms and is recovering well after receiving antiviral drugs.
California
10 of 15 Southern California industries slow their hiring pace
Southern California’s bosses added 80,700 workers in the past year to a record 8.06 million jobs – but that hiring pace is roughly half of the pre-pandemic job market’s gains.
My trusty spreadsheet – filled with state job figures for Los Angeles, Orange, Riverside, and San Bernardino counties – compared employment changes for the region and 15 industries in the year ended in October with the average yearly hiring pace before coronavirus upended the economy.
Yes, there have never been more Southern Californians employed. However, the recent hirings that created the all-time high staffing are far below the average job creation of 159,600 a year in 2015-19.
This is one of many signals of cooler business trends. It’s a chill significantly tied to the Federal Reserve’s attempts to slow what was once an overheated economy.
But Southern California bosses have another challenge – a shortage of workers. The region’s workforce, a measure of labor supply, is basically flat comparing 2024 to 2015-19. Fewer choices of workers have added difficulty for local businesses trying to meet their staffing needs.
Think of that when you learn that among the 15 Southern California business sectors tracked – hiring in 10 industries is below pre-pandemic years compared with five industries with improvements.
The downs
First, contemplate the 10 industries where the hiring pace has weakened, ranked by the size of the decline …
Professional-business services: 1.14 million workers in October – down 4,600 in a year vs. 24,100 annual gains in 2015-19. This net downturn of 28,700 jobs is unnerving because this white-collar work typically pays above-average salaries.
Construction: 378,700 workers – down 3,100 in a year vs. 16,200 annual gains in 2015-19. A building slowdown due to lofty mortgage rates created this 19,300 reversal.
Logistics-utilities: 820,800 workers – up 6,800 in a year vs. 25,800 annual gains in 2015-19. What’s at least a temporary oversupply of warehouses in the region may be behind this 19,000 slowdown.
Manufacturing: 558,400 workers – down 15,300 in a year vs. 4,100 annual cuts in 2015-19. This 11,200 drop is continued losses of local factory work tied to high cost of doing business in the region.
Fast-food restaurants: 359,400 workers – up 3,400 in a year vs. 12,400 annual gains in 2015-19. Weaker consumer spending and a hike in the industry’s minimum wage contribute to this 9,000 drop.
Hotels/entertainment/recreation: 268,300 workers – up 3,400 in a year vs. 9,600 annual gains in 2015-19. This 6,200 cooling reflects worker shortages.
Full-service eateries/food service: 339,100 workers – up 1,600 in a year vs. 6,600 annual gains in 2015-19. Inflation making shoppers pickier is part of this 5,000 cooling.
Information: 214,200 workers – down 100 in a year vs. 3,700 annual gains in 2015-19. Weakness in tech businesses and Hollywood productions created the 3,800 net downturn.
Personal services: 266,600 workers – up 500 in a year vs. 3,200 annual gains in 2015-19. Again, it is hard to find people to do this work. Thus, a 2,700 cooling.
Government: 1.03 million workers – up 11,600 in a year vs. 12,500 annual gains in 2015-19. This 900 dip is status quo.
The ups
Ponder the five industries where the hiring pace rose in the past year, ranked by the size of the gains …
Social assistance: 512,300 workers – up 28,200 in a year vs. 18,300 annual gains in 2015-19. The 9,900 addition comes as more folks need help at home for healthcare and child care.
Healthcare: 836,700 workers – up 30,100 in a year vs. 20,900 annual gains in 2015-19. The 9,200 growth parallels the region’s aging population and its need for medical services.
Retailing: 748,300 workers – up 8,300 in a year vs. 300 annual cuts in 2015-19. This somewhat surprising 8,600 improvement may be consumers tiring of online commerce and wanting to get out to shop.
Financial: 364,100 workers – up 4,400 in a year vs. 3,900 annual gains in 2015-19. The minor 500 improvement is a return to normalcy. Super-heated hiring came in the pandemic days thanks to a brief drop in mortgage rates to historic lows.
Private education: 215,700 workers – up 5,500 in a year vs. 5,100 annual gains in 2015-19. This 400 uptick reflects the growing interest in alternatives to public schooling.
Bottom line
While it’s rare for all industries to be growing at the same time – minus, say, just after an economic downturn – this 2024 edition of the winners vs. losers list raises an important issue.
It appears much of the past year’s job creation is coming from industries that historically pay meager wages. That’s an especially worrisome trend in high-cost Southern California.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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