April 16, 2012 | By | Posted in General News

ANALYSIS: Census data show PA revenue higher than ever

Budget problems the result of too much spending, not lower tax intake
By Eric Boehm | PA Independent
HARRISBURG — The state of Pennsylvania collected more revenue from taxpayers in 2011 than any other year in history.
Pennsylvania’s collections climbed by more than $2 billion last year as the state took in more than $32 billion from beleaguered taxpayers, who now are filing their forms and paying taxes by the Tuesday deadline.

“The nationwide increases in state government tax revenue are an indication of the stabilization of revenues for state governments,” said Lisa Blumerman, chief of the Governments Division for the Census Bureau. “These data help us understand the condition of our state governments and their fiscal ability to continue to provide public services.”
The 2011 Annual Survey of State Government Tax Collections contains annual statistics on the fiscal year tax collections of all 50 state governments, including receipts from licenses and compulsory fees. This survey provides an annual summary of taxes collected by states for up to 25 tax categories, including related penalty and interest receipts of the governments.
The conventional wisdom for the past few years is that the economic downturn wrecked state government finances nationally by undercutting income taxes as people were laid off and sales taxes as consumers spent less.
But the data convey a different picture, both for the nation and for Pennsylvania
In 2008, Pennsylvania collected $32.1 billion in taxes from all sources. 
The Keystone State’s revenue declined in 2009 and barely rebounded in 2010, but the decrease
was hardly dramatic. 
In fact, in 2009 Pennsylvania collected more tax revenue from all sources than in 2006, according to the census data.
But in 2006, few state government officials were crying about a budget crisis.
By last year, revenue had rebounded, exceeding 2008 levels

Pennsylvania Tax Revenue From All Sources
$22.135 billion
$23.187 billion
$25.346 billion
$27.262 billion
$29.050 billion
$30.837 billion
$32.123 billion
$30.071 billion
$30.169 billion
$32.352 billion
U.S. Census Bureau

by more than $200 million and 2006 levels by $3.3 billion.

This year, Pennsylvania’s revenue is running more than $300 million below estimate, but that does not mean the state is going to take in less revenue than in 2011.
On Monday, state Revenue Secretary Dan Meuser said the department expects to match or exceed last year’s total.
The Corbett administration, since taking over in January 2011, has made the case that Pennsylvania’s fiscal problems resulted from excessive spending, not lower revenue.
When he presented Gov. Tom Corbett’s newly proposed budget in March, state Budget Secretary Charles Zogby specifically pointed to about $3 billion in mandatory cost increases, chief among them being debt-service payments and pension costs.
The state’s two pension systems are in a combined $36 billion hole, and annual payments are scheduled to increase from $1.6 billion this year to more than $4 billion by 2016, with higher payments in the ensuing years.
On Monday, Corbett said those increases were “Pac-Man” to the state budget.
“It is just eating up more and more of the budget, and we’re going to have to deal with that,” he said.
Meanwhile, state debt now exceeds $45 billion, up from $23 billion in 2002, according to data collected by the Commonwealth Foundation, a conservative think tank.
Sharon Ward, director of the Pennsylvania Budget and Policy Center, a liberal think tank here, said revenue increases in recent years have not made up for the increased costs incurred during the recession. She specifically pointed to the 15 percent increase to the state medical assistance rolls.
“The best way to characterize it is that we are peeking over the hole, but we haven’t pulled ourselves out,” Ward said.
The census report divides tax revenue in five major categories: property taxes, income taxes, sales taxes, license fees and other taxes, which includes death taxes and severance taxes on natural resources.
Pennsylvania collects the majority of its revenue from income and sales taxes. Last year, income taxes accounted for more than $11 billion and sales taxes totaled more than $16 billion.
Both totals were higher than in 2010, though were only roughly equal to the 2006 levels.
According to data from the Tax Foundation, a tax policy center based in Washington, D.C., Pennsylvania’s tax burden is the 10th highest in the nation, up from 24th in 1991 and 17th in 2003.
“With the 10th highest tax burden in the nation and state tax revenues at the highest level ever, the problem is that government spends too much money. Simply put: Pennsylvania spends too much. It doesn’t tax too little,” said Matt Brouillette, president and CEO of the Commonwealth Foundation.
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