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A blog post by Michael Wood, originally published at Third and State.
After months of falling short of targets, Pennsylvania's General Fund tax collections edged past the monthly estimate in February by $16 million, or about 1%. The good showing was driven largely by higher-than-expected personal income tax collections. Corporate tax collections continued to trail estimates.
The improving revenue picture for both January and February may signal that tax collections (other than corporate levies) have taken a turn for the better. There have been many signs of a growing economic recovery, including a decrease in the unemployment rate, which bodes well for many state tax streams in the second half of the 2011-12 fiscal year.
February collections trimmed the revenue shortfall for the fiscal year to $482 million, or 3%. Tax collections for the fiscal year trail estimates by $449 million.
Compared to the prior fiscal year, total tax collections are up $507 million, or 3%, as of February — another sign that the economy is improving.
Before we break out the champagne, the continuing — and largely self-inflicted — shortfall in corporate tax collections is a cause for concern.
Corporate taxes fell 13% short of estimate in February, bringing the shortfall for the year to just under $300 million, or 18%. Much of the corporate tax shortfall can be laid at the feet of the Corbett administration's February 2011 decision to adopt the federal "bonus depreciation" — something Pennsylvania previously had not done.
At a critical time for crafting next year’s state budget, General Fund revenue collections, still battered by the recession, pushed Pennsylvania’s budget shortfall above $1 billion in April.
April revenues came in $390 million, or 11.8%, below estimate. For the 2009-10 fiscal year, actual General Fund collections have fallen $1.1 billion, or 4.6%, short of projections.
Commonwealth of Pennsylvania General Fund Revenue, Fiscal Year 2009-10 (in $ thousands)
|Estimate to Actual, Fiscal Year 2009-10|
|Oct 09*||Nov 09||Dec 09||Jan 10||Feb 10**||Mar 10||Apr 10|
April 2, 2010
In an important month for corporate tax payments, General Fund collections in March 2010 fell short of estimate by $243 million, or 5.9%. More than half of this shortfall is attributable to lower than expected electrical utility payments. This pushes the revenue shortfall for the fiscal year to $720 million, or 3.5%.