Pa. revenue shortfall continues

Time to start thinking about budget cuts?

//October 5, 2016

Pa. revenue shortfall continues

Time to start thinking about budget cuts?

//October 5, 2016

As of the end of September, year-to-date tax collections totaled $6.6 billion, or $218.5 million below budget estimates, according to state Revenue Department records.

The shortfall has the Wolf administration and state lawmakers concerned. If revenue doesn’t start meeting budget projections, it could mean reduced spending later in the year. The budget is $31.6 billion

“Income tax and corporate taxes scare me the most,” Rep. Seth Grove (R-York) said.

Personal income tax, the state’s biggest source of revenue, was off about $55 million for the first three months of the fiscal year, while corporate taxes were down about $62 million, according to revenue figures. 

Sales and use tax, another major source of revenue, was down about $72 million through September.

“We are heading into the holiday season, so hopefully consumer confidence is up and people shop,” Grove said.

But Grove is not overly confident the budget will hit its mark.

“Overspending this fiscal year has put a huge strain on the commonwealth’s finances,” he said.

Jeff Sheridan, a spokesman for Gov. Tom Wolf, also expressed concern about the magnitude of the shortfall so far, but said it’s still early in the fiscal year. 

Sales and use tax collections are 4.7 percent above last year, he noted. “The commonwealth’s long-term economic forecast remains positive, but we will continue to monitor monthly collections closely as the year continues.”

One area way off projections is the realty transfer tax. Despite strong home sales and steady commercial activity, that tax revenue was off nearly 13 percent through September.

“Realty transfer taxes can fluctuate from month to month,” Sheridan said.

Tax revenue tied to cigarettes, malt beverages, liquor and table games was off about $10 million from projections through September. 

Other money could be coming in, however.

Recent reforms expanding retail sales of wine and beer are supposed to generate about $150 million this fiscal year.

Online gambling, expected to add $100 million in revenue this year, has not yet been legalized.

Gambling revenue is the first place to start to address the shortfall, Rep. Mike Sturla (D-Lancaster) said. “We actually have to pass legislation. I’m not sure why Republicans haven’t done that.”

He added: “It’s almost as though they enjoy the revenue picture being in jeopardy. Maybe that’s their whole plan.”

The current budget, which included a $1.3 billion revenue package, was predicated largely on those sin taxes, along with increased tobacco taxes.

By not passing enabling legislation, the governor could be forced to make some cuts, Sturla said. “Then (the Republican majority) will say ‘that’s not where I would have made cuts.'”