Could reduce projected $63 million end-of-year deficit
The Rendell administration announced Monday that tax revenues from December were higher than expected, potentially reducing the end-of-year deficit predicted three weeks earlier.
According to December figures, this last month’s taxes collected $191.2 million more than estimated, halfway through the fiscal year. To date, the state has collected 1.7 percent more tax revenue than projected. Three weeks earlier, Mr. Rendell projected a $63 million deficit at the end of the fiscal year.
“This is great news, considering last year at this time we were two-percent under estimate for the fiscal year,” Gov. Ed Rendell said Monday. “Collections for December are 15.5 percent better than December 2009 and this is the first time since 2007 that Pennsylvania’s collections exceeded estimate at the halfway point in the fiscal year.
Gary Tuma, spokesperson for Gov. Ed Rendell, said the above-estimated revenue could reduce the deficit down the line but that it was “hard to say.”
“It’s hard to predict whether the actual revenue collections will be on target or not,” said Mr. Tuma. “We have a revenue estimate we develop in good faith and over the course of months as the economy fluctuates, it may get better or not. Consumer confidence can improve or get worse.”
Mr. Tuma said tax revenues in April, when income taxes are due, have already been adjusted for. He said there should not be a sudden swing in revenues either way.
“You’ve got your personal income tax reconciliation coming in. Even though that’s paid in April of ‘11 it actually reflects that 12 month period of 2010. We allow for that when we develop the revenue estimates,” said Mr. Tuma.
On Dec. 16, Mr. Rendell acknowledged the higher-than-expected revenues over the past six months but also pointed to the legislature’s failure to create new tax sources in the past year as responsible for the coming deficit.
“Our revenue is coming in on-target and we have made necessary budget cuts across state government,” said Mr. Rendell. “The primary threat to ending the year with a balanced budget is the General Assembly’s failure to enact a severance tax on natural gas extraction in the Marcellus Shale region, as legislators had pledged they would do.”
Mr. Tuma reiterated the suggestions Mr. Rendell made in his last budget proposal and said while the legislature had lost a year to accumulate revenue, it could still enact them in the coming year. Governor-elect Tom Corbett, however, took a no-tax pledge before winning the election in November.
“In February we proposed the changes in the sales tax, and the elimination of the vendor tax, and the Marcellus shale tax,” said Mr. Tuma. “The governor proposed creating that fund to cushion against the loss of the stimulus money. You’ve lost the year of setting the money aside but all those options are still available.”
He said Mr. Corbett’s transition team has been meeting with the Budget Office to plan for the coming fiscal storm in 2011. Auditor General Jack Wagner has on several occasions warned against a much higher structural deficit facing the legislature during the fiscal year beginning in July 2011.
To date, General Fund collected revenue is $380.8 million, about $4.9 million above estimate. The $28 billion General Fund for 2010-2011 is also funded through bond debt and federal funds. During December, the three largest tax sources were: corporate taxes, which was above estimate by 8.1 percent; sales tax, which was about estimate by 4.9 percent; and personal income tax, which was 12.2 percent above estimate.
Total revenue collections for December were $2.3 billion, which was $176.9 million, or 8.4 percent, more than anticipated.
Sales tax receipts totaled $669.3 million for December, $31.6 million above estimate. Year-to-date sales tax collections total $4.2 billion, which is $102.8 million, or 2.5 percent, more than anticipated.
Personal income tax (PIT) revenue in December was $869.9 million, $94.3 million above estimate. This brings year-to-date PIT collections to $4.4 billion, which is $16.6 million, or 0.4 percent, above estimate.
December corporation tax revenue of $476.9 million was $35.7 million above estimate. Year-to-date corporation tax collections total $1.2 billion, which is $91.4 million, or 7.9 percent, above estimate.
Other General Fund revenue for the month included $67.1 million in inheritance tax, $4.8 million above estimate, bringing the year-to-date total to $380.8 million, which is $4.9 million above estimate.
Realty transfer tax revenue was $25.9 million for December, $100,000 above estimate, bringing the fiscal-year total to $149.3 million, which is $32.8 million less than anticipated.
Other General Fund tax revenue, including cigarette, malt beverage, liquor and table games taxes totaled $139.9 million for the month, $1.9 million below estimate and bringing the year-to-date total to $752.4 million, which is $1.2 million above estimate.
Non-tax revenue totaled $42.4 million for the month, $12.4 million above estimate, bringing the year-to-date total to $319.4 million, which is $7 million above estimate.
In addition to the General Fund collections, the Motor License Fund received $290 million for the month, $119.8 million above estimate. Fiscal year-to-date collections for the fund total $1.3 billion, which is $163.3 million, or 14.4 percent, above estimate.
