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Senate Appropriations Committee Report

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May Revenue Collections Dip Slightly But Fiscal Year Performance Still Strong

General Fund revenue collections in May were $14.9 million below the estimate for the month. However, General Fund tax revenues were $39.4 million higher than the monthly estimate. Non-tax revenue was $54.3 million below the estimate. General Fund revenue collections for the fiscal year-to-date are $813.3 million ahead of estimate.

Early in May, a daily revenue report showed a negative $33.4 million Personal Income Tax (PIT) amount resulting from the correction of a “double-posting error” made in April. Additionally, the Official Revenue Estimate for May included $46.3 million related to gaming expansion revenues that were received earlier in the year. As a result of these two items, May revenue collections needed to overcome $79.7 million in “give-backs” just to meet the monthly estimate, and monthly revenue collections would have exceeded the estimate but for these items.

May 2019 General Fund Revenue vs. Monthly Estimate:

• General Fund revenue collections of $2.62 billion were below the monthly estimate by $14.9 million, or 0.6%.
• General Fund tax revenues were above estimate by $39.4 million, or 1.5%.
• Corporation taxes were $47.3 million, or 15.9%, above the estimate.
• Sales and use tax collections beat the estimate by $46.7 million, or 5.2%, for the month.
• Personal income tax collections were below estimate by $42.2 million, or 4.2%.
• Non-tax revenues missed the estimate by $54.3 million, or 61.6%.

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

• Total General Fund revenues are $813.3 million, or 2.6%, higher than the Official Revenue Estimate through the month of May.
• General Fund tax revenue is $771.6 million, or 2.6%, above estimate.
• Corporation taxes are $590.6 million, or 13.6%, above the estimate.
• Sales and use taxes (SUT) are $320.6 million, or 3.3%, above the estimate.
  • General SUT collections are $237.5 million, or 2.8%, above estimate.
  • SUT collections on motor vehicle sales are $83.1 million, or 6.5%, higher than the estimate.
• Personal income tax collections are short of the estimate by $82.8 million, or 0.6%.
  • Withheld PIT is $93.9 million, or 1%, below the estimate.
  • Non-withheld PIT (annual & estimated payments) is $11.2 million, or 0.3%, above the estimate.
• Non-tax revenues are $41.7 million, or 5.5%, higher than the estimate.

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

• Total General Fund revenues through May are $296.2 million, or 0.9%, more than last year at this time.
• Last year’s 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 $1.96 billion, or 6.8%, higher than last year.
• Corporation taxes are $600 million, or 13.9%, higher.
• Sales and use tax collections are $712.8 million, or 7.6%, higher than last year through May.
• Personal income tax collections exceed last year’s collections by $633 million, or 5.2%.
• Non-tax revenues are $1.7 billion, or 67.5%, less than last fiscal year through May. This large decrease results from tobacco securitization that occurred last year.

Motor License Fund:

• Motor License Fund revenues are below the estimate by $47.9 million, or 1.8%, through May.
• Motor License Fund revenues are $96.3 million, or 3.6%, less than last fiscal year at this time.

Early Childhood Education Funding

Under the Department of Education, there are two grant programs that support pre-kindergarten early education learning: Pre-K Counts and Head Start Supplemental Assistance.

Pre-K Counts provides high-quality pre-kindergarten services to at-risk three- and four-year olds at no cost to families. Children living in families earning up to 300% of poverty, or a family of four earning approximately $75,000 annually, are eligible to apply.

Pre-K Counts is offered in school districts, Keystone STARS 3 and 4 child care programs, Head Start programs and licensed nursery schools. During the current year, 21,381 children are enrolled in full-day Pre-K Counts programs, and 1,709 children are enrolled in half-day Pre-K Counts programs.

The Head Start Supplemental Assistance Program provides state funding to Head Start programs that serve three- and four-year olds living in low-income families based on federal poverty guidelines. The programs provide comprehensive education, health, nutrition and parent involvement services. During the current year, 6,039 children are provided services through the Head Start Supplemental Assistance Program.

The Commonwealth first appropriated $15 million in funding for Head Start Supplemental Assistance during the 2004-2005 fiscal year. Since that time, the Head Start Supplemental Assistance appropriation has grown by 295% to $59.2 million. The Pre-K Counts program was first funded during the 2007-08 fiscal year at $75 million. Since that time, the Pre-K Counts appropriation has grown by 156% to $192.3 million.

The Governor’s proposed budget includes $232.3 million for Pre-K Counts, a $40 million, or 20.8%, increase over the current year and $69.2 million for Head Start Supplemental Assistance, a $10 million, or 16.9%, increase over the current year. It is estimated that the proposed funding level will provide 27,670 children with Pre-K Counts services and 7,000 children with Head Start Supplemental Assistance services.

Pennsylvania ABLE Program – Assets Continue to Grow

The Pennsylvania Office of the State Treasurer reports that the Commonwealth’s ABLE Savings Program has realized $16.7 million in assets as of May 2019. The ABLE Program has seen more than $5 million in growth since the beginning of the year.

The Pennsylvania Achieving a Better Life Experience (ABLE) Act created a tax-free option to assist individuals with disabilities and their families to plan for future expenses. Similar to college savings accounts, ABLE accounts allow individuals with qualifying disabilities and their families to save for disability-related expenses. ABLE savings accounts are not considered as part of the income eligibility determinations for Medical Assistance and other programs that serve individuals with disabilities. These accounts can be used for a variety of disability-related expenses such as health care, housing and transportation. The program was launched in April 2017, and there are currently more than 2,300 individual accounts open.

To learn more about Pennsylvania’s ABLE Program or to open an ABLE account, visit www.paable.gov.

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