Revenue Tracker: Year-to-date Gap at $160 Million

November 3, 2009

With one-third of the fiscal year in the rearview mirror, Pennsylvania’s 2009-10 revenue collections are trailing estimates by nearly 2%. Total collections are $8.8 billion, which is $160 million short of newly-revised projections.

For the month of October, Pennsylvania's General Fund revenue collections came in at $3.5 billion, which was $19.5 million, or 0.6%, below estimates.

Revenue estimates have been revised due to the passage of the 2009-10 budget on October 9, although month-to-month revenue expectations have not yet been released. October 2009 tax estimates and tax collections are unaffected by the budget passage, but will begin to reflect recently enacted tax changes in November 2009. Non-tax collections, which include transfers from other funds, have been changed for October 2009, due to the budget enactment.
  
Taxes Fall Slightly Short of Estimate

Tax collections in October were $9.6 million, or 0.6%, below estimate. Receipts for the Personal Income Tax and the Cigarette, Malt Beverage and Liquor Taxes came in above estimate; however, those gains were more than offset by below-estimate Sales Tax collections.

Meeting monthly estimates for most tax types is a mildly positive sign, as in previous months, few tax types have collected as much revenue as expected. The overall tax revenue shortfall signals that tax collections are still weak and a mid-year revenue gap may be likely. October tends to be a normal month for tax collections (as few quarterly business or income tax payments are made in the month), and October 2009 fits with this trend.  

Tax collections in 2009-10 continue to fall short of collections at this point in 2008-09. Through October, tax collections in 2009-10 are $575 million, or 7.6%, lower than they were as of October 2008, which reflects the recession’s impact on Pennsylvania. Every major tax type, except cigarettes, liquor, and beer taxes, are trailing 2008-09 collections. Pennsylvania’s two largest tax sources, the Personal Income Tax and Sales Tax, are $206 million and $200 million lower, respectively, in 2009-10 than at this point in 2008-09.

Still, revenue collections are significantly closer to target so far this fiscal year than they were this time last year, when the Commonwealth was facing a nearly $565 million revenue deficit.

Non-Tax Collections Show Infusion of Cash from Other Commonwealth Funds

The 2009-10 budget includes transfers of more than $2 billion from other Commonwealth funds, which is reflected in the revenue report as non-tax revenue. Transfers done after the passage of the budget and before the end of October add a significant infusion of cash into the General Fund, although it is not yet clear which transfers were made in October. For the month, non-tax collections (which also include licenses, fees, and interest earnings from the Treasury) totaled $1.8 billion, which exceeded revised estimates by $9.9 million.