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Senator Pat Browne


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Senate Appropriations Committee Report
March 2016

Committee Website


General Fund Revenue Collections, $51.5 Million, or 2.9%, Above Estimate for the Month

General Fund revenue collections for the month ended February 2016 totaled $1.85 billion, which was $51.5 million, or 2.9%, above estimate for the month. Fiscal year-to-date collections total $17.75 billion, which is $60.7 million, or 0.3%, above estimate for the year. General Fund revenue collections through February 2016 are $313.9 million, or 1.8%, more than last year at this time. February is typically the smallest revenue collection month of the fiscal year. Fiscal Year 2014-15 included a $100 million inheritance tax windfall and over $200 million of one-time special fund transfers that did not occur in this fiscal year, and this has the effect of boosting last year’s revenues when compared with this year’s. Total tax revenue for FY 2015-16 is 3.4% higher than it was through February 2015. Excluding the inheritance tax windfall from FY 2014-15, tax revenue collections in FY 2015-16 would be 3.9% more than last year on an equivalent basis.

 Corporation tax collections were over estimate by $47.7 million, or 82.6%, for the month. However, February is not a particularly large or important month for corporation tax collections. Corporation taxes are $43.2 million, or 2.7%, ahead of estimate for the year.

Sales and use tax (SUT) collections were short of estimate by $9.3 million, or 1.4%, for the month. General (i.e. non-motor vehicle) SUT was $11.4 million, or 1.9%, below estimate. Sales and use tax on motor vehicles was $2.1 million, or 2.4%, over estimate for the month. Overall, sales and use tax revenues are $3.2 million ahead of estimate for the year, and they are 3.2% ahead of last year at this time.

Personal income tax (PIT) collections missed the estimate by $28.9 million, or 3.4%, for the month. PIT from employers’ withholding was below estimate by $40 million, or 5%, for the month. Quarterly estimated PIT was above estimate by $2.3 million for February, and PIT payments on annual tax returns beat the estimate by $8.9 million for the month. Overall, PIT revenues are $19.9 million, or 0.3%, below estimate for the year, but they are 4.8% ahead of last year at this time.

Realty transfer tax (RTT) collections were over estimate by $6.9 million, or 26.3%, for the month, and RTT is $8.7 million, or 2.7%, above estimate thus far this fiscal year. Inheritance tax collections were $23.4 million, or 35.3%, above estimate for the month, and they are $19.7 million, or 3.4%, above estimate for the year.

Liquor tax collections of $25.8 million were $291,882 over estimate for February. Cigarette tax collections were below estimate by $1.7 million for the month, and they are $5.9 million, or 1%, below estimate for the year. Table games tax revenue missed the estimate by $150,127. Table games tax is now $479,472, or 0.7%, below estimate for the fiscal year.

Non-tax revenue collections exceeded the monthly estimate by $13.2 million, which brings non-tax revenues to $10.4 million, or 4.4%, above estimate for the year as of the end of February. 

Motor License Fund (MLF) collections were $11.5 million, or 5.5% below estimate for the month of February. The Motor License Fund is $33.4 million, or 2.0%, below estimate for the year.

March is the largest month for General Fund revenue collections. The official revenue estimate projects collections of $4.4 billion or 14.25% of the FY 2015-16 General Fund total. March is also the month where gross receipts taxes (GRT) are remitted. 

The estimate assumes $1.237 billion in GRT collections. We are concerned the sustained period of low energy prices that we are experiencing may have a negative impact on GRT collections this month. 

Governor Proposes $33.3 Billion FY 16/17 Budget 

Governor Wolf is proposing a $33.288 billion General Fund budget. This is an increase of $3.025 billion, or 10%, over House Bill 1460 as enacted by the General Assembly in December 2015. When comparing the Governor’s proposal to the so called “framework” budget, it is a $2.5 billion, or 8.1%, increase. When compared to his revised FY 2015-16 budget (including proposed supplemental appropriations), it is a $2.45 billion, or 7.9%, increase in spending.

To support his requested spend, Governor Wolf is proposing another historic tax increase of $3.6 billion over two years (FY 2015-16 and FY 2016-17). The Governor proposes to increase the personal income tax rate from 3.07% to 3.4%, an increase of 11%. However, because the PIT rate increase is retroactive to January 1, 2016, an initially higher withholding rate would be required if enacted. The initial withholding rate cannot currently be calculated as it depends on the timing of the potential enactment. In addition, the sales and use tax would be expanded to include several currently un-taxed items, and the vendor discount would be capped. The tax on a pack of cigarettes would be increased by $1.00 to $2.60 per pack. Other currently un-taxed tobacco products would be taxed at 40% of the wholesale price. The bank shares tax and the insurance premiums taxes would be increased, and a new 8% tax would be imposed on promotional slots play at casinos. A 6.5% severance tax would be imposed on natural gas production effective July 1, 2016. Indications are that natural gas producers would be able to take a full credit for the existing gas well impact fees. The Governor also assumes a $100 million increase in the Liquor Control Board profit transfer through modernization initiatives. The following chart summarizes the Governor’s tax proposal.

 


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