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Senate Appropriations Committee Report
General Fund Collections Above Estimate for December
General Fund revenue collections for the month ended December 2014 totaled
$2.71 billion, which was $161.7 million, or 6.3%, above estimate for the month.
Fiscal year-to-date collections total $13.3 billion, which is $270.7 million, or
2.1%, above estimate for the year. The year-to-date revenue surplus increases to
$350.7 million when you factor in the $80 million State Stores Fund profit
transfer that was incorporated in the September revenue estimate but remains
Fiscal year-to-date 2014-15 General Fund revenue collections are $1.01
billion, or 8.3%, ahead of last year. The FY 2014-15 Official General Fund
Revenue Estimate calls for annual growth of 5.5%, and so with one-half of the
fiscal year behind us, revenue collections are exceeding expectations ahead of
the all-important Spring months to come.
December’s corporation tax collections were above estimate by a strong $77.5
million. The corporate net income tax was over estimate by $58.1 million for the
month, but the capital stock and franchise tax was $17 million short of
estimate. However, $29.4 million of corporation tax collections remains in the
accelerated deposits account, which will eventually be distributed among the
various corporation tax types. For the fiscal year-to-date, corporation taxes
are running $163.5 million, or 12.9%, ahead of estimate.
Sales and use tax (SUT) collections were above estimate for the month by
$10.3 million, or 1.3%. Non-motor SUT was below estimate by $3.1 million for the
month, but SUT on motor vehicles was over estimate by $13.3 million. General SUT
collections (i.e. non-motor) were 2.4% above last year’s collections, which
seems to be indicative of a mildly improved holiday shopping season. The full
impact of the holiday shopping season will be seen in January when sales tax
collections will be remitted for sales made during the month of December.
Personal income tax (PIT) collections were over estimate by $25.3 million,
or 2.5%, for December. Employers’ withholding was $2.2 million above estimate
for the month. Estimated PIT payments were $22.9 million ahead of estimate for
the month, and annual tax payments were $222,694 above estimate. December 2014
employers’ withholding collections were 17.4% above last year, but there were
five large collection days in December 2014 compared with only four such days in
December 2013. Employers’ withholding collections for fiscal year 2014-15 are
5.9% ahead of last fiscal year, and the Official Revenue Estimate calls for
year-over-year growth of 3.94%. Total PIT collections are now $14.5 million, or
0.3%, ahead of estimate through the first half of the current fiscal year.
The realty transfer tax exceeded the estimate by $6.1 million, but
inheritance tax collections were below estimate by $7.4 million for the month.
Cigarette taxes were above estimate by $8.3 million, and liquor tax collections
were above estimate by $145,971. Table games tax collections were $408,730 above
estimate for the month. Non-tax revenues were $38 million above estimate for the
month, led by a strong monthly performance in revenues received from unclaimed
property (i.e. Treasury escheats).
Motor License Fund collections were $12.4 million below estimate for the
month of December.
December is the fourth consecutive month where actual revenue collections
have exceeded the estimate. To date, the FY 14/15 revenue surplus is $270.7
million. This is a welcome situation, however, it is too early to determine if
the trend will continue through the remainder of the fiscal year as surplus
amounts from month-to-month have been inconsistent.
Revenue collections in the second-half of the fiscal year represent nearly
57% of total estimated General Fund revenues. In addition, the largest
collection months are March, April and June which represent more than 37% of
estimated revenues. Therefore, any slippage in second-half collections has the
potential to have a more dramatic effect on total revenue collections.
Many factors, known and unknown, may affect prospective revenue collections.
Tax refund activity may also affect the balance sheet. The Department of Revenue
has indicated that tax refunds may exceed the assumptions in place when the
budget was approved. This has the effect of widening the budget gap even
While the revenue surplus is good news, its impact is offset, to a great
extent, by several risks to the forecast which were disclosed at the Governor’s
Mid-year Budget Briefing. The FY 14/15 budget assumed revenues totaling about
$234 million that are not expected to come to fruition. These include cigarette
taxes (-$14 million), casino license fees (-$125 million) and non-impact
drilling revenue (-$95 million).
Fiscal challenges remain paramount and many difficult decisions will be
required to put the Commonwealth on the path to fiscal stability.
Lottery Fund Update Through 12-31-2014
This year’s budget increased Lottery spending levels by $240 million. The
majority of the programmatic spending increase was in Long-Term Care programs
for Pennsylvania’s seniors. Other spending increases were expected in Lottery
prize payments and vendor commissions, which are tied to ticket sales levels.
Some Lottery programs, such as the PACE program, required less funding in this
year’s budget due to the availability of carryover program funding.
At the start of the fiscal year, the Governor’s administration projected a
$100 million increase in net ticket revenues for the entire fiscal year. This
increase in net ticket revenue, coupled with the use of balances in the Lottery
Fund, was projected to support this year’s Lottery Fund spending.
However, net Lottery Fund revenue collections through December 31 are
approximately $79 million below collections for the same time period last year.
Revenues from instant tickets exceeded last year’s performance by $18 million,
or 5%, while ticket sales for online games are collectively $93 million, or 19%,
below last year’s collections. To date this fiscal year, there have been no
large, multi-state jackpots unlike last year when there were two large Powerball
jackpots in the first six months of the fiscal year.
The under-performance of net revenues so far this year and the increased
spending from the Lottery Fund will require close monitoring of the fund’s
reserve levels and financial position for the remainder of the fiscal year.
While year-to-date revenue collections are behind last year, it is possible that
prize payments and vendor commissions will also be lower than anticipated,
potentially offsetting revenue performance.
Contact Senator Browne:
On the Web:
702 W. Hamilton Street
9 AM to 5 PM
281 Main Capitol
9 AM to 4:30 PM
Western Lehigh County
Upper Macungie Township Building
8330 Schantz Road
Mon, Wed, Fri
9 AM to 4:30 PM