Senate Appropriations Committee Report
(all tables and graphics can be viewed online)
November Revenues Bolster Surplus
General Fund revenue collections for the month of November exceeded the estimate by $217.9 million, or 3.4%. General Fund tax revenues were $203.2 million, or 8.2%, higher than the monthly estimate, and non-tax revenue beat the estimate by $14.7 million, or 0.4%. General Fund revenue collections for the first five months of the fiscal year are $1 billion, or 5.7%, ahead of estimate. November’s General Fund revenues of $6.62 billion included the transfer of $3.84 billion from the federal Coronavirus State Fiscal Recovery Fund for revenue loss replacement.
November 2021 General Fund Revenue vs. Monthly Estimate:
Fiscal Year 2021-22 vs. the Official Revenue Estimate To-Date:
Fiscal Year 2021-22 vs. Fiscal Year 2020-21:
Motor License Fund:
IFO Releases Its Latest Five-Year Economic & Budget Outlook
The Independent Fiscal Office (IFO) released its annually mandated, five-year Economic and Budget Outlook for fiscal years 2021-22 to 2026-27 on November 15, 2021.
For the current 2021-22 fiscal year, the IFO projects a revenue surplus of approximately $1.6 billion above the Governor’s Official General Fund Revenue Estimate. For the coming 2022-23 budget year, the IFO projects General Fund revenue to decrease by 2.9%. Next year’s revenue decline results mostly from a decrease in one-time transfers from the federal Coronavirus State Fiscal Recovery Fund – from $3.84 billion in FY 2021-22 to $2.41 billion in FY 2022-23. In addition to the decline of federal funds, a new transfer from sales and use tax to the Public Transportation Trust Fund (PTTF) begins in FY 2022-23. For that year, the IFO projects a transfer of $456 million from the General Fund to the PTTF.
The IFO projects that from FY 2021-22 to FY 2022-23, General Fund expenditures are expected to increase by $2.73 billion (7.1%), and half of this increase is within the Department of Human Services Medical Assistance and Long-Term Living appropriations as the IFO is projecting the expiration of the enhanced federal FMAP resulting from the pandemic.
The IFO categorizes the major cost drivers that result in the 7.1% projected state expenditures growth in the coming budget year as follows:
The IFO’s latest report shows that the projected five-year General Fund Financial Statement will have a positive ending balance of $5.1 billion in FY 2021-22 and $365 million in FY 2022-23 due to revenues being bolstered by federal fiscal relief. However, once the federal money is exhausted and the enhanced FMAP expires, the IFO is projecting that the General Fund will have a negative ending balance of nearly $2 billion per year from FY 2023-24 through FY 2026-27.
The Economic and Budget Outlook report helps illustrate the difference between revenue surpluses and structural deficits. Despite ending the 2021-22 and 2022-23 fiscal years with sizable revenue surpluses, the IFO is still projecting a structural deficit of nearly $2 billion per year afterwards simply because without having the benefit of federal fiscal relief, state expenditures are projected to exceed available revenues.
The full report is available on the IFO’s website at the following URL:
Property Tax Relief Reserve Account
Due to strong gaming revenues, the amount of revenue in the Property Tax Relief Reserve Account totaled nearly $120 million after this year’s property tax relief payments were made. This will be the highest balance in the relief reserve account since we started making general property tax relief payments in 2008-09.
The balance in the relief reserve account is to be 25% of the amount of property tax relief provided, capped at $150 million. The balance of the reserve account at the end of 2008-09 was $105 million and began to drop after that due to the slower-than-anticipated rollout of gaming. The balance in 2019-20 dropped to $6 million. Last year, the Commonwealth needed to transfer $200 million from Personal Income Tax revenues to ensure there was sufficient cash in the fund to make the required property tax relief payments.
Gaming Revenue Growth
Figures released by the Pennsylvania Gaming Control Board show total gaming and fantasy contests revenue generated in the Commonwealth during October 2021 was $425,916,762, which represents an increase of 33% compared to revenue generated in October 2020. It also eclipsed the all-time monthly revenue high set in July of this year.
October 2021 vs. October 2020
Agency COVID Testing Costs
The Wolf Administration required state employees working in state health care facilities and high-risk facilities to be fully vaccinated by September 7. Individuals who are not vaccinated are required to undergo weekly COVID testing. The Budget Office prepared cost estimates for the Administration’s testing mandate protocol. According to information provided by the Budget Office, these costs will be covered by a federal grant.
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