Revenue Collections Fall Short of Estimates for a Second Straight Month

For a second straight month, Pennsylvania General Fund revenue collections fell short of targets, dropping the fiscal year-to-date revenue surplus to $105 million, or less than 1%.

February collections missed estimates by $48 million, or 2.8% of monthly estimates. All major General Fund tax streams, with the exception of corporate taxes, fell short of projections in February, which is typically the smallest month for revenue collections. 

That the shortfalls were so widespread and overall collections fell short of estimate for a second straight month make this a bit concerning as we head into the two most important months for revenue collections – March and April.

For the 2012-13 Fiscal Year, overall collections are $105 million, or 0.7%, above estimate, with tax collections exceeding estimate by $65 million, or 0.4%. 

Personal income taxes (PIT) fell $37 million, or 5%, short of estimate in February, while sales tax collections were below estimate by $9 million, or 1.3%. For the fiscal year, PIT is $39 million, or 0.6%, above estimate, while sales tax is $193 million, or 3.2%, lower than expected. 

Corporate taxes continued to exceed monthly estimates, this time by $2.7 million, or 4.4%. For the fiscal year, corporate taxes are now $270 million, or 19.6% higher than expected. With March and April critical months for corporate tax collections, this amount could grow or shrink significantly. Added to this is the uncertainty regarding quarterly corporate tax payments since the reduction of the capital stock and franchise tax rate at the beginning of 2013.

In his recently released budget proposal, Governor Tom Corbett projected finishing the fiscal year with a $232 million revenue surplus. March and April collections will largely determine if these revised targets are met. If collections fall short over the next two months, it could prompt further reductions in the 2013-14 budget.

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