Earlier this month, state officials confirmed that Pennsylvania’s General Fund took in $4.4 billion in revenue last month, 6.2 percent less that expected.
Pennsylvania Revenue Secretary Dan Hassell said that so far this fiscal year, General Fund collections are 0.2 percent below estimates.
Here’s what happened:
While the closing of non-essential businesses across the state no doubt had an impact on the General Fund’s collections for March, it’s not the sole reason for the slight decline, state officials say.
“The shortfall in March is only partially related to the COVID-19 outbreak,” Hassell said. “We expect the pandemic will have a greater impact on revenues in the coming months, particularly in a month like April when many of the tax filing due dates are pushed back.”
The department noted in its monthly report: “As businesses have closed and laid off workers, withholding of income tax and sales tax have also fallen. These sources are below estimate in March by $20 million and $24.2 million, respectively.”
Hassell said the department anticipates more shortfalls now that the tax deadline has been postponed from April until July. According to the report, personal income tax funds are expected to generate $2.1 billion for the General Fund.
In addition to COVID-19 diverting funds and delaying tax collections, the Department of Revenue said some of March tax revenues represent tax paid for past periods.
For example, approximately 60 percent of the sales tax remitted in March was for retail sales in February. There are also final payments with 2019 tax returns, representing activity last year to be accounted for.
Hassell said corporations across the state had an effect on the bottom line in March, as well. March revenues also include estimated payments of corporation tax for 2020.
“If businesses believe that their income will be lower this year, they may cut their estimated payments,” Hassell said in a statement.
Corporation tax revenues in March are approximately $161.1 million below estimate.
March revenue by tax type
- Sales tax receipts totaled $839.2 million for March, $24.2 million below estimate. Year-to-date sales tax collections total $8.5 billion, which is $68.2 million, or 0.8 percent, more than anticipated.
- Personal income tax revenue in March was $1.1 billion, $120.6 million below estimate. This brings year-to-date PIT collections to $9.8 billion, which is $14.9 million, or 0.2 percent, below estimate.
- March corporation tax revenue of $2.2 billion was $161.1 million below estimate. Year-to-date corporation tax collections total $4.1 billion, which is $246.8 million, or 5.7 percent, below estimate.
- Inheritance tax revenue for the month was $116.1 million, $20.6 million above estimate, bringing the year-to-date total to $867.4 million, which is $65.8 million, or 8.2 percent, above estimate.
- Realty transfer tax revenue was $38.6 million last month, $4.9 million below estimate, bringing the fiscal-year total to $405.1 million, which is $9.6 million, or 2.4 percent, more than anticipated.
- Other General Fund tax revenue, including cigarette, malt beverage, liquor and gaming taxes, totaled $58.8 million in March. $1.9 million above estimate and bringing the year-to-date total to $1.3 billion, which is $8 million, or 0.6 percent, above estimate.
- Non-tax revenue totaled $117.1 million for the month, $6.3 million below estimate, bringing the year-to-date total to $401.7 million, which is $64.6 million, or 19.2 percent, above estimate.
- In addition to the General Fund collections, the Motor License Fund received $217.7 million in March, $6.5 million below estimate. Fiscal year-to-date collections for the fund — which include the commonly known gas and diesel taxes, as well as other license, fine and fee revenues — total $2 billion, which is $21.3 million, or 1 percent, below estimate.