SACRAMENTO — Corporations scurrying to meet a tax amnesty deadline deposited at least $2.3 billion into the state treasury over the weekend -- enough to erase a substantial portion of California's budget shortfall.
The windfall could reshape the budget debate in Sacramento, bringing some relief as lawmakers ponder painful cuts in state programs to close a budget gap estimated at $8.5 billion.
The cash -- which state officials say they are still counting and ultimately may reach $3 billion -- came mostly through a controversial program that allows companies and individuals accused of owing back taxes to come clean and avoid facing tough new penalties as of April 1.
The California Taxpayers Assn., an anti-tax group representing corporations in the amnesty filings, said the companies would continue to fight in administrative hearings and in court to get their money back.
State officials concede that many of the corporations may win, and are trying to determine how much of the disputed cash is safe to use to close the budget gap. The money would be one-time only, and budget experts warn against using such funds for ongoing programs. But it could significantly reduce pressure on lawmakers and the governor to raise taxes or cut deep into programs as they near the July 1 deadline for approving a budget.
"The temptation will be to use it to balance the budget," said Assemblyman Joe Canciamilla (D-Pittsburg). "The hope will be that the state will ultimately prevail and just won't have to pay it back, or that the economy will improve and enough new revenue will come in to cover it."
Assemblyman Darrell Steinberg (D-Sacramento), who last year chaired the lower house's budget committee, predicted the money would be used to help restore some funding to education.
"If there is one area where that one-time money should be spent, it is K-12 education," he said. "Maybe for this year, it can help solve one of the major stumbling blocks between the governor and the Legislature."
"It's a positive sign," said Assembly Speaker Fabian Nunez (D-Los Angeles). "But we have to see if it's a real windfall or just some companies trying to protect themselves against potential liability."
State Controller Steve Westly, who sponsored the program, called the sudden influx "extraordinary ... something every Californian should view as good news." Still, he said, "I am calling for prudence.... We have a mountain of cases, a mountain of checks. This will take us some time to review."
