Outpacing projections, Pa. collected $6.2B in taxes in March | Tuesday Morning Coffee
Year-to-date collections total $32.3B, which is $1.1B billion above estimate
In what’s sure to add some fuel to the fire in this year’s budget debate, the latest round of state tax collections are out, and the numbers appear to be robust.
Pennsylvania collected $6.2 billion in general fund revenue in March, coming in $499.4 million, or 8.8% ahead of estimates, according to data released by the state Department of Revenue.
Year-to-date collections total $32.3 billion, which was $1.1 billion, or 3.7% of estimates, the agency said in an April 3 statement.
The news puts Pennsylvania in what is becoming a rarer coterie of states — those whose collections remain vigorous, even as other states feel the pinch of a slumping stock market and sluggish consumer spending.
“There has been a little bit of a need to rein in expectations,” Brian Sigritz, the director of state fiscal studies for the National Association of State Budget Officers, told Stateline in a story published Monday. “There wouldn’t be enough money to go around for everyone’s priorities.”
Below, a look at the state’s March collections by major category, and a bit of context and analysis.
Sales Tax: Sales tax collections totaled $1.1 billion for March, which is $25 million below estimate. Year-to-date sales tax collections total $10.5 billion, which is $184.5 million, or 1.8%, more than anticipated, according to the Revenue Department.
Personal Income Tax: Income tax revenue totaled $1.6 billion last month, or $51 million above estimate. That brought year-to-date collections to $12 billion, which was $84.4 million, or 0.7%, below estimates.
Corporate Taxes: Corporate tax collections came in at $3 billion last month. That was $367.7 million above estimate. Year-to-date corporation tax collections total $6.2 billion, which was $876.8 million, or 16.4% above estimates, state data showed.
Inheritance Tax: Inheritance revenue for March totaled $160.7 million, or $27 million above estimates. That brought the year-to-date total to $1.1 billion, which was $30.9 million, or 2.8 percent, above estimate.
Realty Transfer Tax: Collections totaled $50.5 million for March, or $11.3 million below estimate. That brought the fiscal year-to-date total to $487 million, which was $73.6 million, or 13.1%, less than anticipated.
Other: Other general fund revenue, including cigarette, malt beverage, liquor and gaming taxes, totaled $75.2 million for the month, or $17.8 million above estimate. That brought the year-to-date total to $1.3 billion, which was $6 million, or 0.5 percent, below estimate.
Non-tax Revenue: Collections totaled $241.9 million for the month, or $72.3 million above estimate, according to the Revenue Department. That brought the year-to-date total to $676.2 million, which was $220.4 million, or 48.4% above estimate.
The vigorous collections are sure to add another layer of complexity to the already vigorous debate around Gov. Josh Shapiro‘s $44.4 billion budget proposal.
Pennsylvania likely will be sitting on a projected budget surplus of more than $8 billion by the time it closes the books on the 2022-23 budget year on June 30, according to a recent report.
And if you factor in the state’s Rainy Day Fund savings account, that total approaches something like $13 billion, the data show.
But it’s probably not going to last. In fact, if current trends hold, the commonwealth will be facing cumulative budget deficits totaling nearly $13 billion by fiscal 2027-28, that same research shows.
Last month, the top Republican on the House Appropriations Committee warned that the state will face a massive budget deficit within three years under Shapiro’s proposal, charging that it masks a structural deficit by drawing more than $2 billion from the state’s nearly $6 billion surplus.
“All those gimmicks … mask that reality of a $2 billion deficit, structural deficit within the budget, and it’s something that needs to be addressed, the sooner the better, because it just will continue to get worse,” Rep. Seth Grove, R-York, argued.
Administration spokesperson Manuel Bonder parried, calling the budget a commonsense plan that provides solutions to the most pressing needs of Pennsylvania residents.
“In keeping with the governor’s track record of fiscally responsible leadership, this budget is built around conservative revenue estimates – using projections that are $3 billion lower over the next five years than those of the always-cautious Independent Fiscal Office,” Bonder said.
Bonder added that Shapiro “looks forward to working with the Democratic-led House and the Republican-led Senate to deliver on these commonsense solutions for all Pennsylvanians.”
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