Pa. Revenue Growth Strong in 2011-12, Despite Missing Official Estimates

Some state policymakers are concerned that Pennsylvania tax collections are trailing official revenue targets for the first two months of the 2011-12 Fiscal Year. However, Pennsylvania’s revenue collections for July and August are running well ahead of the same two-month period in 2010-11.

While actual tax collections are below official estimates, some of that underperformance may be attributed to a change in the way those revenue estimates were made, as the Pennsylvania Budget and Policy Center explains in our recent Revenue Tracker. The 2011-12 estimates predict a larger share of annual revenue coming in during the first half of the fiscal year than revenue estimates of the past several years. If 2011-12 collection patterns are similar to most recent years, such a change may make budget “shortfalls” more common in the first half of the fiscal year, followed by surpluses in the second half.

September, one of the five big revenue months of the fiscal year, will give us a better idea of the strength of the economy and the effect of this change to the revenue estimates.

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