Senator Pat Browne E-Newsletter

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Senate Appropriations Committee Report

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General Fund Revenues Steady in February

General Fund revenue collections in February were $2.5 million below the estimate for the month. However, General Fund tax revenues were $18.2 million higher than the monthly estimate. Non-tax revenue was $20.7 million below the estimate. General Fund revenue collections for the fiscal year-to-date are $287.4 million ahead of estimate. The Governor’s FY 2019-20 Executive Budget projects that FY 2018-19 General Fund revenue collections will exceed the Official Revenue Estimate by $424.9 million at fiscal year’s end.

February 2019 General Fund Revenue vs. Monthly Estimate:

  • General Fund revenue collections of $2.04 billion were below the monthly estimate by $2.5 million, or 0.1%.
  • General Fund tax revenues were above estimate by $18.2 million, or 0.9%.
  • Corporation taxes were $38.5 million, or 49.5%, above the estimate.
  • Sales and use tax collections beat the estimate by $11.2 million, or 1.5%, for the month.
  • Personal income tax collections were below estimate by $18.3 million, or 2%.
  • Non-tax revenues missed the estimate by $20.7 million, or 46.3%.

Fiscal Year 2018-19 vs. the Official Revenue Estimate To-Date:

  • Total General Fund revenues are $287.4 million, or 1.4%, higher than the Official Revenue Estimate through the month of February.
  • General Fund tax revenue is $150.7 million, or 0.8%, above estimate.
  • Corporation taxes are $340 million, or 21.6%, above the estimate.
  • Sales and use (SUT) taxes are $211.6 million, or 2.9%, above the estimate.
    • General SUT collections are $150.5 million, or 2.4%, above estimate.
    • SUT collections on motor vehicle sales are $61.1 million, or 6.8%, higher than the estimate.
  • Personal income tax (PIT) collections are short of the estimate by $368 million, or 4.3%.
    • Withheld PIT is $86.3 million, or 1.2%, below the estimate.
    • Non-withheld PIT (annual & estimated payments) is $281.7 million, or 17.1%, short of estimate.
  • Non-tax revenues are $136.8 million, or 51%, higher than the estimate.

Fiscal Year 2018-19 vs. Fiscal Year 2017-18:

  • Total General Fund revenues through February are $752.4 million, or 3.6%, lower than last year at this time.
  • Last year’s February revenues included $1.5 billion of proceeds from the securitization of tobacco settlement payments, which has the effect of skewing a true year-over-year comparison of General Fund revenues.
  • General Fund tax revenue is $1.06 billion, or 5.7%, higher than last year.
  • Corporation taxes are $399.2 million, or 26.3%, higher.
  • Sales and use tax collections are $530.5 million, or 7.7%, higher than last year through February.
  • Personal income tax collections exceed last year’s collections by $95.2 million, or 1.2%.
  • Non-tax revenues are $1.8 billion, or 81.8%, less than last fiscal year through February. This large decrease results from tobacco securitization and gaming expansion that occurred last year.

Motor License Fund:

  • Motor License Fund revenues are below the estimate by $78.3 million, or 4.2%, through February.
  • Motor License Fund revenues are $158.9 million, or 8.2%, less than last fiscal year at this time.

Governor Wolf’s Proposed Budget FY 2019-20

On February 5th, Governor Wolf unveiled his 2019-20 budget with a $34.1 billion spending plan, which is an increase of $930 million, or 2.8%, from last year’s budget. In his budget proposal, the Governor calls for a significant level of supplemental spending to be added to the FY 2018-19 budget. The nearly $500 million in supplemental funding is primarily supporting programs and operations within the Department of Corrections and the Department of Human Services, including funding for the General Assistance Cash Assistance program which Governor Wolf chose to re-instate last year.

Governor Wolf’s FY 2019-20 budget is not nearly as bold as some of the proposals rolled out in his first term. With that said, the Governor’s budget proposal for FY 2019-20 does contain initiatives that cause concern and will require significant review.

One of the new initiatives included in the 2019-20 budget proposal is $15 million for a multi-year election modernization plan that would provide grants to counties for the purchase of voting equipment. The budget also proposes to institute mandatory combined reporting (effective January 2020) and to begin a phase-down in the Corporate Net Income Tax rate to 5.99% by 2024. As he has done in the past, Governor Wolf is once again recommending to charge a fee for State Police coverage in municipalities without a local police force. This is projected to raise $103.9 million for the State Police budget which is nearly double the amount Governor Wolf suggested for a similar initiative contained in his budget proposal for 2018-19.

Once again, Governor Wolf is proposing an increase to the minimum wage. The 2019-20 budget proposes increasing the minimum wage to $12 per hour beginning July 1, 2019, and further increasing wages by 50 cents each year through 2025 until the rate of $15 per hour is achieved. This proposal assumes revenue generation of $120.2 million in combined personal income and sales and use tax revenue.

The Senate Appropriations Committee is currently in the midst of holding a series of hearings with state agencies to gain greater insight into the 2019-20 budget proposal. The complete hearing schedule and other budget materials can be found on the committee’s website: https://appropriations.pasenategop.com/.

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