Fiscal delays caused by the storm worsened California’s deficit. Newsom wants to control deadlines

Governor. Gavin NewsomThe administration is asking the Legislature to give it more control over when Californians pay their taxes, a problem that stems from weather-related tax filing delays.

Atmospheric rivers in early 2023 brought rain and flooding to California. That prompted the federal and state governments to delay tax filing deadlines by more than six months, a maneuver that budget experts say played a role in the state’s deep budget deficit.

A new trailer bill — state budget legislation authored by the administration — would shift authority to match federal tax delays from the Franchise Tax Board to the state finance director.

The trailer bill comes after Newsom presented his revised budget proposal, which aims to close an estimated $27.6 billion deficit through budget cuts, spending delays and withdrawals from the rainy day fund.

Newsom didn’t mention the bill on the trailer during his budget presentation, but blamed the storms for “this blackout period that we all fell for.”

The Internal Revenue Service repeatedly delayed California’s federal income tax filing deadline last year after winter storms battered the state and caused flooding in dozens of counties. Tax deadlines in 55 of California’s 58 counties were first postponed from April 18, 2023 to May, then to October, with the the deadline finally falls on November 16, 2023.

These tax extensions left the state “flying in a fog, without some essential instruments,” said Finance Department spokesman HD Palmer.

“Normally, April is the biggest month for tax revenue in California,” Palmer said. Due to the postponement of tax deadlines, “we had to wait more than six months to obtain this crucial cash flow data. This has significantly reduced our ability to forecast California’s revenues.

The administration called last year’s IRS tax deferral, which applied to more than 99 percent of California taxpayers, “overbroad.”

The proposal would also allow the state to grant deadline extensions to individual taxpayers who can prove they were affected by a disaster through letters from FEMA or the Small Business Administration, insurance claims, police reports or other documents.

“We prefer to comply with (IRS deadlines) when possible so that we don’t have two different sets of deadlines for filers,” Palmer said. “What our experience over the last two years has shown is that we need to be able to make adjustments when delays are proposed.”

State lawmakers who lead the Assembly and Senate budget committees did not immediately respond to questions about the proposal.

The Legislature will consider this bill as part of the state budget program this spring. Lawmakers are required to pass a balanced budget by June 15.

Read Complete News ➤

Leave a Reply

Your email address will not be published. Required fields are marked *

16 + sixteen =