The Lead

Pa. tax revenues were down in March, as officials brace for bigger future hit from COVID-19 

By: - April 1, 2020 5:03 pm

This story was updated at 5:12 pm with comment from Rep. Matt Bradford.

In the first sign of expected financial strains from COVID-19, the Pennsylvania Department of Revenue announced that March tax revenues were 6.2 percent less than projected.

The department reported $4.4 billion in revenue, about $294.6 million less than anticipated.

The shortfall, Revenue Secretary Dan Hassell said in a statement, was only partially related to the coronavirus pandemic.

“We expect the pandemic will have a greater impact on revenues in the coming months,” Hassell said.

Matt Knittel, head of the Independent Fiscal Office — which offers nonpartisan analysis of state policy — said that some of the dip was expected, due to shifts in tax payments.

Gov. Tom Wolf’s pandemic mediation efforts, including a March 19 order to shut down thousands of businesses, did not go into full effect until more than half way through the month.

That order, directed at all non-“life-sustaining” businesses, may impact as many as two in five Pennsylvania workers, according to one estimate by a University of Pittsburgh economist.

But there were still some small impacts on revenues last month. Income and sales tax revenues were, respectively, $20 million and $24.2 million below estimates, reflecting businesses closures and worker layoffs, according to the department.

The state has already delayed its income tax deadline until July 15 to match the federal Internal Revenue Service. That would delay up to $2.1 billion in state revenues, according to the Department of Revenue.

The results troubled lawmakers, such as House Appropriations Committee Chairman Stan Saylor, R-York, who said that the numbers are “going to create problems” for the state.

In a statement, Rep, Matt Bradford, of Montgomery County, the ranking Democrat on the Appropriations Committee, said that while revenue assumptions are dramatically different, the state’s next budget must prioritize front line workers, from health care to retail to first responders.

“We will still need to pass a budget that adequately funds public education and supports working families, but right now we need to do whatever it takes to help our front-line workers flatten the curve, so our health care systems do not become overrun,” Bradford said.

There is one small bit of hope, though. Officials are still waiting to see how the recently passed federal COVID-19 stimulus impacts the state, and what future dollars could still be authorized by Congress.

“The federal stimulus package is very large, and it could offset a significant portion of the future negative revenue impact from the COVID-19 virus,” the IFO’s Knittel said in an email. “Much will depend on how quickly the federal monies get to state residents, as well as the duration of the business closures.”

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Stephen Caruso
Stephen Caruso

Stephen Caruso is a former senior reporter with Pennsylvania Capital-Star. Before working with the Capital-Star he covered Pennsylvania state government for The PLS Reporter.