Revenue Tracker: Collections Come Up Short Once Again in November
December 2, 2009
With General Fund revenue collections in for November, the Commonwealth continues to be about 2% short of estimate for the 2009-10 fiscal year – a gap of $217 million.
For the month of November, General Fund revenue collections totaled $1.6 billion, falling short of estimate by $57 million, or 3.4%.
The state’s two primary taxes – the personal income tax and the sales tax – both fell short of their targets for the month. With PIT and sales tax collections estimated to make up approximately two-thirds of all General Fund collections in 2009-10, the continuing trend of these taxes missing estimate makes it difficult for the General Fund overall to meet revenue expectations.
|
Commonwealth of Pennsylvania General Fund Revenue, Fiscal Year 2009-10 (in $ thousands) |
|||||
| Estimate to Actual, Fiscal Year 2009-10 | |||||
| Jul 09 |
Aug 09 |
Sep 09 |
Oct 09* |
Nov 09 |
|
| Estimate | $1,653,000 |
$1,625,400 |
$2,169,000 | $3,538,600 |
$1,653,700 |
| Actual | $1,650,885 |
$1,605,503 |
$2,050,364 | $3,519,063 |
$1,596,900 |
| Monthly Diff. | ($2,115) |
($19,897) | ($118,636) | ($19,537) |
($56,800) |
| Cumulative Diff. | ($2,115) |
($22,012) | ($140,648) |
($160,185) |
($216,985) |
| Fiscal Year-to-Date Percent Difference from Estimate | -2.0% | ||||
| Comparison to Fiscal Year 2008-09 | |||||
| Jul 09 | Aug 09 | Sep 09 | Oct 09 | Nov 09 | |
| Actual FY 08-09 | $1,746,220 |
$1,668,890 |
$2,343,696 |
$1,648,995 |
$1,640,930 |
| Actual FY 09-10 | $1,650,885 | $1,605,503 | $2,050,364 | $3,519,063 |
$1,596,900 |
| Monthly Diff. | ($95,335) |
($63,387) |
($293,332) |
$1,870,068 |
($44,030) |
| Cumulative Diff. | ($95,335) |
($158,722) |
($452,054) |
$1,418,014 |
$1,373,984 |
| Fiscal Year-to-Date Percent Difference from 2008-09 | 15.2% |
||||
Compared to the previous year, November 2009 collections declined by $44 million, or 2.7%. Fiscal year-to-date collections are $1.4 billion, or 15.2% higher than 2008-09, due to significant transfers from other Commonwealth funds that occurred in October 2009 as part of the budget deal. A better yard stick for comparing this year to last is to compare tax collections. Fiscal year-to-date tax revenues (excluding non-tax revenue) are approximately $630 million, or 6.9%, less than where they were in November 2008.
Total Collections and Major Taxes Miss the Target in November
November a Slow Revenue Month
Compared to other months, November is typically a “slow” month for General Fund collections. Few quarterly payments are due from businesses and non-withheld personal income tax (PIT) payers. In fact, less than 1% of the fiscal year’s corporate tax collections are expected to be made in November. Sales tax collections tend to be smaller due to the lull in consumption prior to the holiday season and real estate normally slows down. As in any month, it is important not to read too much into the singular results for the month, but look at longer trends. In a slow month, this is particularly important as fluctuations due to timing of payments or the number of banking days can skew the results.
Results for November were mixed. Overall collections missed estimate, as the state’s two primary taxes, PIT and sales tax, both fell short of their targets for the month. Collections of PIT were $21.2 million, or 2.9%, lower than expected. The sales tax shortfall was more severe, falling $52.7 million, or 8%, short of estimate. For the fiscal year, PIT is $105 million (2.9%) below estimate and sales tax collections have fallen $142 million (4.1%) short of its target.
Non-Tax Collections Fall Short of Projections by 34%
Non-tax collections were also short this month. Non-tax collections include licenses, fees, interest earnings, and transfers from other Commonwealth funds. In November, these were supposed to bring in $39.3 million, including $22.4 million in transfers, but only $25.9 million was collected. This created a shortfall of $13.4 million, or 34% for the month. For the fiscal year, non-tax revenues are $12.5 million lower than estimate, or 0.7%. At this time, it is not clear what caused the discrepancy in November.
Non-tax collections are a significant part of the overall revenue plan for 2009-10, due to the projected transfer of more than $2 billion from other Commonwealth funds to the General Fund. These transfers are expected to make up 7.3% of total General Fund revenue for the fiscal year.
Other Taxes Exceed Expectations
Not all signs were bad in November, however. A number of taxes exceeded estimate in the month. Corporate, inheritance, realty transfer, and cigarette/liquor/beer taxes were each above estimate. In total, these taxes exceeded estimate by $30.6 million, or 13.5%. This marks the fourth straight month where corporate collections exceeded estimates and the second straight month of revenue surpluses for inheritance, realty transfer, and cigarette/liquor/beer taxes.
Conclusion
November collections show signs of the start of the long-awaited economic recovery, but this may be merely an anomaly. After previous recessions, tax collections took up to two years to recover to pre-recession levels. Due to the severity of the current recession, the recovery seems likely to take longer.
We should have a much better idea of where revenue collections for the fiscal year are going after December, as that is a pivotal month of collections for most taxes.
