The Tax Foundation, a Washington, D.C.-based public policy advocacy group, released an analysis of state tax collections and pending rate changes that puts Pennsylvania in the middle of the pack but admonished other states for tax increases and overspending.
Pennsylvania is ranked No. 24 among the states for its short- and long-term average tax-collection increases, according to the foundation. The commonwealth’s tax collections increased 7.2 percent from 2010 to 2011, and 3.7 percent from 1997 to 2011, according to the analysis that used census data.
“State budget gaps occurred because state spending relied on revenue projections growing at an unsustainable 8 percent per year,” foundation analyst Joseph Henchman wrote. “The consequent correction has been termed the ‘New Normal’: an era where state officials must make do with lower annual tax revenue growth, more in line with long-term economic growth.”
The analysis noted that states failing to curb spending while using one-time federal stimulus money and tax increases to fill budget holes were neglecting to account for the damages done to economies by the increases.
Individual income tax, excise tax and sales tax collections grew, while property tax collections dropped due to assessments leveling with depressed home values, the foundation said.