February Shortfall Brings State Revenue Deficit to $477 Million for Fiscal Year

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Revenue Tracker

March 2, 2010

February marked another bad month for General Fund revenue collections in Pennsylvania, bringing the state’s fiscal year-to-date shortfall to $477 million, or 2.9%.

With much of General Fund revenue coming typically in March and April, February’s anemic collections make it highly likely that the state will end the fiscal year with a shortfall larger than the $525 million that the Rendell Administration is projecting. That means the Administration will likely make further mid-year budget cuts in order to balance the books.

February collections came in at $1.5 billion, falling short of estimate by $102 million, or 6.4%.

Commonwealth of Pennsylvania General Fund Revenue, Fiscal Year 2009-10 (in $ thousands)
Estimate to Actual, Fiscal Year 2009-10

Aug 09 Sep 09 Oct 09* Nov 09 Dec 09 Jan 10 Feb 10**
Estimate $1,625,400 $2,169,000 $3,538,600 $1,653,700 $2,020,700 $2,242,100 $1,591,900
Actual $1,605,503 $2,050,364 $3,519,063 $1,596,919 $1,983,510 $2,121,856 $1,489,600
Monthly Diff. ($19,897) ($118,636) ($19,537) ($56,781) ($37,190) ($120,244) ($102,300)
Cumulative Diff. ($22,012) ($140,648) ($160,185) ($216,966) ($254,156) ($374,400) ($476,700)
Fiscal Year-to-Date Percent Difference from Estimate -2.9%
Comparison to Fiscal Year 2008-09

Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10
Actual FY 08-09 $1,668,890 $2,343,696 $1,648,995 $1,640,930 $2,108,965 $2,173,751 $1,502,249
Actual FY 09-10 $1,605,503 $2,050,364 $3,519,063 $1,596,919 $1,983,510 $2,121,856 $1,489,600
Monthly Diff. ($63,387) ($293,332) $1,870,068 ($44,011) ($125,455) ($51,895) ($12,649)
Cumulative Diff. ($158,722) ($452,054) $1,418,014 $1,374,003 $1,248,548 $1,196,653 $1,184,004
Fiscal Year-to-Date Percent Difference from 2008-09  8.0%
*Estimates revised based on passage of 2009-10 budget beginning in October 2009.
**Estimates re-certified in January 2010 based on the passage of Act 1, 2010 (table games). This legislation is expected to add $84.2 million in non-tax revenue between February and June 2010.

Download a PDF version of the 2009-10 Fiscal Year Revenue Tracker.

Download a PDF version of the 2008-09 Fiscal Year Revenue Tracker.

Projected Revenue Growth Premature

When the 2009-10 state budget was enacted in October, it was expected that Pennsylvania’s revenue collections would begin to pick up as the national economy improved in late 2009 and early 2010. As collections in February fell short of estimate in every major category, such hopes were evidently premature.

February collections, which are typically the smallest of any month, show the global recession is still adversely affecting Pennsylvania tax collections. In fact, tax collections were down $461 million, or 3.2%, fiscal year-to-date, as compared to those through February 2009. February’s monthly shortfall also continues a streak of revenue shortfalls from estimate that dates back to May 2008.

Revenue Streams Trail Estimates

The state’s two major taxes – the personal income tax (PIT) and sales tax – made up the bulk of collections in February (83%) and also contributed significantly to this month’s shortfall (63%). Non-tax revenue, which was re-certified in January due to the passage of Act 1 of 2010 (authorizing table games in state casinos), fell short of revised estimates in February by $6.9 million, or 21%.  Even cigarette and alcohol taxes, which have been stronger than estimated over the fiscal year, fell short in February, missing estimates by $9.4 million, or 8% for the month.