Senate Appropriations Committee Report
(all tables and graphics can be viewed online)
First Quarter General Fund Revenues Prove Resilient
General Fund revenue collections for the month of September were above estimate by $248.7 million, or 8.3%. General Fund tax revenues were $283.7 million, or 9.6%, higher than the monthly estimate, but non-tax revenue missed the estimate by $35 million. General Fund revenue collections for the first quarter of the fiscal year are $459 million, or 4.9%, ahead of estimate.
Total corporation tax revenues exceeded the monthly estimate by $104.5 million, or 21.2%. September is an important quarterly estimated payment month, and quarterly estimated CNIT payments were above estimate by $95.5 million, or 25.6%. Annual CNIT payments also were more than estimate by $25.4 million, or 25.2%. Quarterly estimated CNIT payments for the 2020 calendar year will be due again in December, and hopefully September’s overperformance will be repeated three months from now.
Sales and use tax (SUT) collections were above estimate for the month by $90.7 million, or 10%. September 2020 SUT collections were 5.4% higher than September 2019, led by a strong performance in sales tax on motor vehicle sales. SUT collections are 15.6% above last year through the first quarter of the fiscal year; however, $115 million was transferred out of sales and use tax last year for tobacco debt service payments. Adjusting for last year’s transfer, SUT revenues for the first three months of FY 2020-21 are 11.1% higher than the first quarter of FY 2019-20. However, shifts resulting from accelerated sales tax prepayment delays due to COVID-19 explain much of the year-over-year growth. It remains to be seen whether SUT collections will continue to outpace expectations as COVID-19 stimulus funds received by businesses and individuals begin to wind down.
Personal income tax (PIT) collections exceeded the estimate by $19.5 million, or 1.5%. Quarterly estimated PIT collections (also due in September) missed the estimate by $40 million, or 9.2%; however, PIT withholding on payroll was higher than the estimate by $55.4 million, or 6.5%. Total PIT collections were 4.3% higher than last year for the month of September, but September 2020 included five large collection days during the month whereas September 2019 included only four such days. Absent this mismatch, PIT revenues would have been lower than last year for the month of September. A comparison of FY 2020-21 PIT revenue collections with FY 2019-20 collections is not a fair exercise because the first quarter of FY 2020-21 includes significant collections that were shifted into July because of tax filing extensions resulting from the COVID-19 emergency.
September 2020 General Fund Revenue vs. Monthly Estimate:
Fiscal Year 2020-21 vs. the Official Revenue Estimate Year-To-Date:
Fiscal Year 2020-21 vs. Fiscal Year 2019-20 (Note Effect of Tax Filing Extensions, Prior Year Transfers and Collection Days):
Motor License Fund:
Understanding the Effect of Dueling Revenue Estimates
On May 29, 2020, Governor Wolf signed a $25.99 billion General Fund budget that funded most of the Commonwealth’s General Fund programs through the end of November. Typically, the Commonwealth’s annual fiscal year budget runs from July 1st through June 30th. However, in the spring of 2020, the COVID-19 emergency devastated the state’s economy, throwing the Commonwealth’s finances into turmoil. Future uncertainty regarding the Commonwealth’s fiscal position made it too risky to enact a twelve-month budget, and there is perhaps no better indication of this uncertainty than the vast difference between the Governor’s FY 2020-21 Official General Fund Revenue Estimate and the Independent Fiscal Office’s (IFO’s) Official Revenue Estimate.
The Governor’s Official General Fund Estimate projects total General Fund revenue of $34.63 billion for Fiscal Year 2020-21, whereas the IFO’s Official Revenue Estimate calls for total revenues of $35.87 billion. The $1.24 billion difference means the IFO is predicting 3.6% more General Fund revenue than the Administration is expecting. Moreover, a closer comparison of both estimates reveals that the discrepancy between quarterly and monthly projections may bode well for General Fund revenue performance over the entire fiscal year. Although the Governor’s Official Estimate is $1.24 billion lower than the IFO’s, the Governor’s projections for the first quarter of the fiscal year are actually higher than the IFO’s, which means that actual revenues above the Governor’s Official Estimate of $459 million for the year-to-date are $740 million above the IFO’s estimate for the year-to-date. If this trend holds, the likelihood of achieving the IFO’s projections increases, which would result in a sizeable General Fund revenue surplus over the Governor’s estimate. Such a revenue surplus would be of significant help in closing the budgetary deficit outstanding for the remaining seven-month budget for Fiscal Year 2020-21. The following table illustrates the differences between the IFO’s and Governor’s Official Revenue Estimates.
Breakdown of Spending Necessary to Complete the FY 2020-21 Budget
In May, the General Assembly passed a short-term budget to better position the Commonwealth to evaluate its financial position due to COVID-19 at a later date. The total amount of General Fund expenditures was $25.8 billion with a combination of full year appropriations and 5-month appropriations. The chart on the top shows the amount appropriated in the 5-month budget and the amount necessary to provide 12-month funding for the appropriations that only received 5/12ths, separated between appropriations that are considered mandatory spending and discretionary spending. A mandatory appropriation is considered spending that is mandated by state or federal statute, and a discretionary appropriation is considered spending that is determined at the discretion of the General Assembly. The chart on the bottom further breaks down the remaining spending by appropriations needed in the Department of Human Services, appropriations needed for General Government Operations, and other appropriations that were only funded at a 5/12ths level in May, further separated by appropriations that are considered mandatory and discretionary.
Pennsylvania Game Commission – Welcome to the 2020 Elk Cam
The Elk cam is in Benezette, Pennsylvania on some of the 1.5 million acres of state game land owned and managed by the Pennsylvania Game Commission. This cam is live during the elk rut, which takes place from mid-September to mid-October. Tune in one or two hours after dawn and one or two hours before dusk, when area wildlife tends to be most active. You can expect to see wild turkey, deer, ground hogs, and elk, among other wildlife.
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