from Mark Smith, Smith Policy Group
California revenues remain strong in March (via Jason Sisney)
California collected $1.4 billion (10.8%) more than projected in state income taxes during March, principally due to gains in corporation taxes. Specifically, corporate income tax collections were $902 million (20.5%) more than projected. Personal income tax (PIT) collections, net of refunds, were up $474 million (5.7%), with gains split between PIT return payments and withholding. The figures come from preliminary state tax agency data, which is subject to correction in the coming weeks. These numbers compare actual collections to projections in the Governor’s January 9 budget proposal. For the 2025-26 fiscal year through March, income taxes are running $7.5 billion (6.2%) above the Governor’s January 9 projections, with the big collection months of April and June still to come. An upward revenue revision of between $10 billion to $30 billion remains possible across the two fiscal years, 2025-26 and 2026-27, in the Governor’s May Revision. That revised budget proposal is due on May 14. Such an upward revision may result in at least a small budget surplus for this year’s budget process. At least 40% of any revenue gains since January 9 are likely to be dedicated to schools and community colleges due to the Proposition 98 minimum funding guarantee.
Data Center Push Back
Two bills aimed at regulating the data center industry scored a win on Wednesday. The California Assembly Utilities and Energy Committee passed Assemblymember Rick Zbur’s AB 2383, which would create a special electricity rate for large energy users. It’s the only data center bill that the Data Center Coalition, an industry group, isn’t opposing, instead taking a neutral position. But there’s a flip side to every coin. Groups representing other major electricity customers in the manufacturing and refining industries, like the California Large Energy Consumers Association and the Western States Petroleum Association, are in opposition to the bill, because they don’t want their members to absorb the new regulations. The committee also passed AB 1577, by Assemblymember Rebecca Bauer-Kahan, which would require data centers to report their monthly energy usage to the state.
Paying more for homeowners insurance these days?
California lawmakers finally have their blueprint for tackling wildfire costs. Now comes the more difficult part: deciding who pays. The hotly anticipated study, produced by the California Earthquake Authority, the quasi-public agency that oversees the state’s wildfire liability fund for utilities, lays out a sweeping — and politically fraught — set of options to stabilize a system strained by costly, climate-driven wildfires. At its core is a blunt conclusion: The state’s current system of wildfire response relies on utilities, ratepayers and insurers to absorb rising losses, and climate change is outpacing the state’s ability to respond. Within hours of its release, the Capitol snapped into motion. Briefings were scheduled. Hearings are in the works. And investors, reading the same signals, sent electric utility stocks higher Wednesday, with PG&E outpacing the broader market. The question now is whether — and when — lawmakers will actually move on any big swings. The report’s power lies mostly in giving politicians new political cover after they largely punted last year, when they chose to only temporarily refill a wildfire liability fund for utilities to avoid a Southern California Edison bankruptcy after the Los Angeles firestorm. “I do expect that the study will directly inform legislative proposals and legislation that you’ll see this year,” said Assemblymember Cottie Petrie-Norris, the chair of the Assembly Utilities and Energy Committee. But, she added, it may take time: “I anticipate this to be a multi-year effort.” She is planning a mid-May oversight hearing alongside Assemblymember Lisa Calderon, who chairs the Assembly Insurance Committee. Sen. Josh Becker, the author of SB 254, the law that commissioned the study, meanwhile, is planning briefings in the Senate as early as Friday. The governor’s office responded on Wednesday with a measured statement, calling the report the product of “rigorous work,” and saying the administration looks forward to reviewing its recommendations to improve safety, affordability and insurance access
California’s economy leads again, grows another 5% in 2025 to record $4.25 trillion GDP (Governor’s Press Release)
SACRAMENTO – California continues to outperform every other state as the largest economy in the U.S. New data from the U.S. Bureau of Economic Analysis shows that, in 2025, California’s Gross Domestic Product (GDP) has once again grown, to a whopping $4.25 trillion, representing 5% growth from the prior year. This represents 13.8% of the entire U.S. economy, gaining more GDP than any of the other 49 states, including Texas ($2.904 trillion), Florida ($1.835 trillion), and New York ($2.468 trillion).
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