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February Revenues Bounce Back Following Facility Closure 

General Fund revenue collections of $2.68 billion for February were $593.9 million, or 28.4%, above estimate for the month.  On January 19, 2021, the Department of Revenue announced that its Bureau of Imaging and Document Management (BIDM) facility in Harrisburg was being temporarily closed due to COVID-19 health and safety protocols. The closure impacted the depositing of checks and pushed revenue that would have been deposited in January to February.  The fourth quarterly installment of estimated personal income tax (PIT) for 2020 was due in January, so the facility closure significantly increased personal income tax collections in February when the payments were finally processed, which accounts for much of this month’s surplus and offsets January’s monthly revenue shortfall of $162.4 million.

February’s quarterly estimated personal income tax collections were $360.5 million higher than the monthly estimate as a result of the facility closure in January.  Additionally, personal income tax withheld from payroll was above estimate by $32.2 million for the month, and PIT from annual tax payments was $20.8 million above estimate.  Combined, PIT collections from all sources were $413.4 million above estimate for February.

Sales tax collections for February were also strong, coming in at $106.7 million above estimate.  Sales tax and withheld PIT collections are paid in more “real time” than some other tax types that are paid annually or quarterly, so these two tax types, in particular, are often a good barometer to measure the Commonwealth’s revenue performance going forward – at least in the near-term. Collectively, in a typical fiscal year (e.g., without COVID), sales tax and withheld PIT make up approximately 65% of all General Fund tax revenue, which is another reason why having these two tax types performing well is important to the Commonwealth’s fiscal position.

General Fund revenue collections for the fiscal year-to-date are $901.3 million ahead of estimate.  The Governor’s FY 2021-22 Executive Budget, released about one month ago, projects that FY 2020-21 General Fund revenue collections will exceed the Official Revenue Estimate by $535.5 million at fiscal year’s end.  Therefore, General Fund revenue for FY 2020-21 is now $365.8 million higher than the Governor’s revised estimate for the fiscal year, and significant tax collection months are still to come.

February 2021 General Fund Revenue vs. Monthly Estimate:

  • General Fund revenue collections of $2.68 billion were above the monthly estimate by $593.9 million, or 28.4%, as a result of the Department of Revenue’s January processing facility closure.
  • General Fund tax revenues were above the estimate by $598.6 million, or 28.9%.
  • Corporation taxes were $22.4 million, or 24.2%, above the estimate, but corporation tax collections in the month of February are relatively minimal compared to other months of the year.
  • Sales and use tax (SUT) collections beat the estimate by $106.7 million, or 13.3%, for the month.
    • General SUT collections were $104.8 million, or 15.3%, above estimate.
    • SUT collections on motor vehicle sales were $2 million, or 1.7%, higher than the estimate.
  • Personal income tax collections were above estimate by $413.4 million, or 43.9%.
    • Withheld PIT was $32.2 million, or 3.6%, more than the estimate.
    • Non-withheld PIT (annual & estimated payments) was $381.2 million higher than the estimate after recovering from January’s facility closure setback.
  • Inheritance tax revenues exceeded the estimate by $17.1 million, or 20.5%.
  • Realty transfer tax collections were $17.5 million, or 71.9%, above estimate.
  • Non-tax revenues missed the estimate by $4.6 million, or 23.6%.

Fiscal Year 2020-21 vs. the Official Revenue Estimate To-Date:

  • Total General Fund revenues are $901.3 million, or 3.9%, higher than the Official Revenue Estimate through the month of February.
  • General Fund tax revenue is $881.9 million, or 4%, above
  • Corporation taxes are $394.1 million, or 18.9%, higher than the estimate.
  • Sales and use taxes are $171 million, or 2.1%, above estimate.
    • General SUT collections are $191.3 million, or 2.7%, more than the estimate.
    • SUT collections on motor vehicle sales are $20.3 million, or 1.7%, lower than the estimate.
  • Personal income tax collections are ahead of the estimate by $177.5 million, or 1.8%.
    • Withheld PIT is $59.8 million, or 0.9%, above estimate.
    • Non-withheld PIT (annual & estimated payments) is $117.7 million, or 4.3%, above estimate.
  • Non-tax revenues are $19.4 million, or 2.8%, higher than the estimate.
  • Fiscal Year 2020-21 vs. Fiscal Year 2019-20:
  • An overall comparison of FY 2020-21 to FY 2019-20 is difficult and misleading because of various tax shifts between the two years and one-time special fund transfers made in FY 2020-21.

Motor License Fund:

  • Motor License Fund revenues are below estimate by $39.1 million, or 2.1%, through February.
  • Motor License Fund revenues are $2.1 million, or 0.1%, lower than last fiscal year at this time.

General Fund Revenues

The General Fund revenue surplus for the current fiscal year through February 2021 stands at $901.3 million above the Official Revenue Estimate. This surplus is made up of $881.9 million in tax revenues and $19.4 million in non-tax revenues. The Governor’s Executive Budget projects that FY 2020-21 year-end revenue will exceed the Official Revenue Estimate by $535.5 million.

For the Five-Year Economic and Budget Outlook released in January 2021, the Independent Fiscal Office (IFO) increased its General Fund revenue estimate for FY 2020-21 by $2.56 billion from its original estimate that was made in June 2020.  For FY 2020-21, the IFO’s updated mid-year General Fund revenue estimate is nearly $950 million higher than the Administration’s revised 2020-21 Revenue Estimate, as adjusted in the FY 2020-21 Governor’s Executive Budget.

For FY 2021-22, the IFO revenue estimate (excluding any effect from the Governor’s proposed tax changes and revenue modifications) is $332 million more than the amount projected in the Governor’s Executive Budget.

Website:  https://www.revenue.pa.gov/COVID19/Documents/cares_act.pdf

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