Senator Pat Browne E-Newsletter

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March Revenue Collections Exceed Expectations

General Fund revenue collections for the month of March outperformed expectations by $378.2 million as the result of strong collections across the board in most tax categories, with a few exceptions.  Collectively, corporation taxes exceeded the monthly estimate by $82.6 million, or 4%, with corporate net income tax and financial institutions tax (i.e., bank shares tax) leading the way.  Insurance premiums tax, which is mostly paid once per year in March, was below estimate by $27.4 million, or 7%.  Collections were notably robust in consumption taxes, including sales and use tax (SUT) and other taxes, including personal income tax (PIT) and inheritance tax.  Non-tax revenues were also above estimate by $17.6 million.

General Fund revenues are now $1.28 billion, or 4.7%, above November’s revised Official Revenue Estimate even though the Governor’s FY 2021-22 Executive Budget projected a revenue surplus of only $535.5 million by this fiscal year’s end in June 2021.

March General Fund Revenue:

  • General Fund revenue collections of $4.84 billion were above the monthly estimate by $378.2 million, or 8.5%.
  • General Fund tax revenues were ahead of estimate by $360.6 million, or 8.3%.
  • Corporation taxes were $82.6 million, or 4%, above estimate.
    • Corporate net income tax was above estimate by $92.4 million, or 25.1%.
    • Gross receipts tax missed the estimate by $11.6 million, or 1.2%.
    • Insurance premiums tax was $27.4 million, or 7%, lower than estimated.
    • Financial institutions tax was $31.1 million, or 9.2%, above estimate.
  • Sales and use tax (SUT) collections beat the estimate by $85.8 million, or 10.3%, for the month.
  • Personal income tax (PIT) -collections were higher than the estimate by $95.1 million, or 7.5%.
  • Realty transfer tax revenue exceeded the estimate by $16.5 million, or 45.9%.
  • Inheritance tax collections were above estimate by $59.5 million, or 61.9%.
  • Non-tax revenues exceeded the estimate by $17.6 million, or 17.4%.

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

  • Total General Fund revenues are $1.28 billion, or 4.7%, higher than the Official Revenue Estimate through the month of March.
  • General Fund tax revenue is $1.24 billion, or 4.7%, higher than estimated.
  • Corporation taxes are $476.7 million, or 11.5%, above estimate.
  • Sales and use taxes are $256.8 million, or 2.8%, higher than the estimate.
    • General SUT collections are $255.6 million, or 3.3%, above estimate.
    • SUT collections on motor vehicle sales are $1.2 million, or 0.1%, over estimate.
  • Personal income tax collections exceed the estimate by $272.6 million, or 2.5%.
    • Withheld PIT is $105.7 million, or 1.3%, above estimate.
    • Non-withheld PIT (annual & estimated payments) is $166.9 million, or 5.7%, ahead of estimate.
  • Non-tax revenues are $37 million, or 4.7%, over estimate.

Motor License Fund:

  • Motor License Fund revenues are below the estimate by $28.9 million, or 1.4%, through March.
  • Motor License Fund revenues are $10 million, or 0.5%, more than last fiscal year at this time.

Pennsylvania Extends Personal Income Tax Filing Deadline to May 17, 2021 

The Department of Revenue announced that the deadline for taxpayers to file their 2020 Pennsylvania personal income tax returns and make final 2020 income tax payments is extended to May 17, 2021. This means taxpayers will have an additional month to file from the original deadline of April 15. The Internal Revenue Service also announced it would extend the federal income tax filing deadline to May 17, 2021.

The IRS said in its announcement that the extension is another action the agency is taking to do everything it can to help taxpayers navigate the unusual circumstances related to the COVID-19 pandemic. Under Pennsylvania law, the deadline for filing state income tax returns is tied to the deadline set at the federal level.

The extension means the Department of Revenue will waive penalties and interest on final 2020 personal income tax returns (Form PA-40) and payments through the new deadline of May 17, 2021.

Taxpayers who make estimated income tax payments should continue to do so on the same filing schedule that they would normally follow. This includes taxpayers with estimated tax payments due on April 15, 2021. 

Although the filing deadline for 2020 tax returns has been extended, the Department of Revenue is encouraging taxpayers who are able to file their returns electronically to do so as soon as possible. If you are expecting a refund from the Commonwealth, filing electronically will help avoid a delay in the release of your refund.  The Department of Revenue is encouraging taxpayers to electronically file their Pennsylvania personal income tax returns with the department’s new, state-only filing system available at mypath.pa.gov

Index of State Economic Momentum and the Importance of Federal Fiscal Relief

Federal Funds Information for States (FFIS) provides research and analysis of the impact on states of federal budget actions.  FFIS’ services play an important role in allowing Pennsylvania’s policymakers to navigate the increasingly complex interaction between federal and state government fiscal policies, especially those related to the response to the COVID-19 pandemic.  In its recent issue of State Policy Reports (Volume 39, Issue 6, March 2021), FFIS analyzes the Index of State Economic Momentum, which ranks states based on their most recent performance in three key measures of economic vitality: personal income growth, employment growth and population growth.

Measures of the three components are averaged, and the national average is set at zero.  Each state’s score is then expressed as a percentage above or below the national average.  The chart shows the results based on the most recent data.  In this first update of 2021, Pennsylvania is below the national average by just over one-half of one percent, which places the Commonwealth at number 34 among all states and the District of Columbia, with one (1) being the highest performing state.

As FFIS points out, this most recent index analysis incorporates quarterly personal income figures that reflect a relative absence of the types of federal fiscal stimulus assistance that bolstered personal income and propped up economic performance in earlier quarters.   There were no federal relief bills enacted between late April and late December 2020, so direct payments to individuals and bonus unemployment assistance are not as much of a factor in the personal income growth component of the index, in which Pennsylvania ranks 35th.  In the employment growth component of the index, Pennsylvania also ranks 35th, and the Commonwealth ranks even lower at 41st among all states and D.C. in the change in state population component of the index – further evidence of the Commonwealth’s demographic challenges.

Recently, the Independent Fiscal Office (IFO) published its estimate of actual federal fiscal relief to Pennsylvania in 2020, and the amounts are significant.  Despite the overarching negative impact of the pandemic, Pennsylvania personal income is actually higher than it would have been without the pandemic because of stimulus payments. 

 

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