By JUDY LINSACRAMENTO, Calif. (AP) â¿¿ California's unemployment rate fell to 8.6 percent in May, marking the first time in nearly five years the jobless number has dipped below 9 percent, the state Employment Development Department reported Friday. The drop in May â¿¿ a decrease of 0.4 percentage points from 9 percent in April â¿¿ puts California's unemployment rate at the lowest level since November 2008. While California's rate continues to remain 1 percentage point above the national average of 7.6 percent, the state's improving labor market has narrowed the gap. According to the U.S. Labor Department, California and West Virginia reported the largest declines in unemployment among all states. California also has seen the largest drop in unemployment among the states over the past 12 months. State officials reported a non-farm jobs gain of 10,800 during May for a total gain of more than 767,000 since the economy began to rebound in February 2010. Roughly 1.6 million Californians remain unemployed, down 364,000 from May of last year. California hit a high of 12.4 percent unemployment for much of 2010 but has seen steady job gains since then. It now is tied with New Jersey for the sixth highest unemployment rate in the nation, according to the Labor Department. Nevada has the highest rate, followed by Illinois and Mississippi, Rhode Island and North Carolina. In another indication of the state's reviving financial fortunes, the state Department of Finance on Friday released its monthly bulletin that showed tax collections in California running 1 percent, or nearly $1 billion, ahead of projections for the fiscal year. The department said housing starts have accelerated while the prices of existing homes for sale have been rising. The state reported there were nearly 18,000 fewer Californians receiving unemployment insurance benefits in May compared to the previous month, even though the number of new claims rose by 3,500.