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Senate Appropriations Committee Report
Total General Fund Revenue for August 2015 was $1.87 Billion
The Monthly Report compares August’s revenue collections
against prior year collections because an Official Revenue Estimate has not been
certified by the Budget Secretary. The lack of an official revenue estimate is a
direct result of the Governor’s total veto of the FY 2015-16 budget enacted by
the General Assembly. The Official Revenue Estimate is traditionally certified
at the time the Governor signs the annual operating budget into law.
Total General Fund revenue for August 2015 was $1.87
billion, which was $76.4 million, or 4.3%, higher than General Fund revenue
collected in August 2014. General Fund tax revenue (excluding non-tax items such
as fines & penalties and Treasury escheats) was 4.1% higher than in August 2014.
For the fiscal year-to-date (July-August), total General Fund revenue is 0.9%
lower than FY 2014-15, resulting from special fund transfers made in July 2014
that did not recur in this fiscal year. The Independent Fiscal Office (IFO)
released its FY 2015-16 General Fund Revenue Estimate on June 15, 2015, and the
IFO’s estimate anticipates total tax revenue growth of 2.5% over the prior
fiscal year. Therefore, with two months completed in the current fiscal year,
General Fund tax revenue collections appear to be on track with expectations,
but there are variations within tax types that warrant closer inspection.
August 2015 corporation tax collections were $12.3 million,
or 26.7%, higher than last year. August is not a particularly important month
for corporation tax collections, and so while the 26.7% growth over last August
is encouraging, it may not be significant in the context of total annual Sales
and Use Tax (SUT) collections.
Corporation tax collections are 4.4% higher than last year
for the fiscal year-to-date.
Sales and use tax collections (SUT) were $14.9 million, or
1.9%, ahead of last August, which is a significant slowdown compared with July’s
collections. General SUT grew by $12.2 million, or 1.8%, over last year, while
SUT on motor vehicles was $2.8 million, or 2.3%, more than August 2014. Sales
and use tax collections so far during FY 2015-16 are 3.3% ahead of last year.
However, the IFO’s FY 2015-16 revenue estimate calls for SUT growth of 3.5% over
the entire fiscal year. Therefore, after the first two months of the fiscal
year, SUT collections are slightly off pace as compared with the IFO revenue
estimate. Because sales and use tax collections make up approximately 32% of all
General Fund revenue collections, a small difference in SUT revenue growth has
more overall impact on revenue collections than larger differences in other tax
types such as corporate net income tax, which makes up only about 9% of General
Personal income tax (PIT) collections, which make up the
largest source of General Fund revenues at approximately 41% of the total, were
$31.4 million, or 4.4%, ahead of last year. PIT withholding was 3.5% higher than
last year, while PIT non-withholding was 21.9% more than August 2014. Total PIT
collections during FY 2015-16 are 4.7% more than last year at this time. The IFO
revenue estimate forecasted PIT revenue growth at 4.8% for FY 2015-16.
Therefore, PIT collections thus far this fiscal year are very close to the IFO
Combined, personal income tax and sales and use tax
collections typically make up almost three-quarters of total General Fund
revenues. Through August 2015, combined PIT and SUT collections are 4.0% ahead
of last year at this time. After two months of collections, General Fund
revenues appear to be on track for positive growth, but it is still too early to
draw any conclusions for the remainder of the fiscal year.
Other positive signs include realty transfer tax at 29.8%,
inheritance tax at 10% and table games tax at 12.7% higher than last year
through the month of August. On the other hand, capital stock and franchise tax
collections are 39.5% below last year at this time, which is expected because of
the continued phase-out of the tax.
Motor License Fund collections are running 7.4% ahead of
last year at this time.
Governor’s Budget Impasse
The budget impasse is now in its third month, and the
negative consequences of the Governor’s unprecedented, total veto of House Bill
1192 are becoming more readily apparent. Despite there being no enacted General
Fund appropriations, Federal law and recent court rulings require state workers
to be paid for hours worked. Through August, more than $700 million has been
spent from the General Fund for wages, salaries and benefits for Executive
Branch employees. At the same time, hundreds of millions of dollars of payments
due to school districts, local governments, counties, non-profit organizations
and vendors have been withheld.
The first two large payments to school districts (totaling
approximately $1.05 billion) were due on July 30 and August 27, 2015. These
funds, however, could not be paid because the Governor vetoed HB 1192 entirely,
including all funding for basic education. This situation has forced school
districts to seek temporary loans and to spend down reserves in order to open
and operate during the budget impasse. In addition, thousands of college
students and their families are facing uncertainty and hardship in making
tuition payments as PHEAA grants cannot be awarded. Counties and human service
providers have also been forced to draw on reserves, limit hiring and, in some
cases, curtail services. These are just a few examples of the unnecessary
difficulties resulting from the Governor’s full budget veto.
Since July 1, we have met and continue to negotiate with
the Wolf Administration to put a responsible, balanced and sustainable budget in
place for Fiscal Year 2015-16. In an attempt to provide much-needed funding for
human service, education and hunger programs, House Republicans attempted to
override the Governor’s vetos on a line-by-line basis. Unfortunately, the House
was unsuccessful in this regard, and critical funding remains bottlenecked as of
the moment. While negotiations on a full-year budget continue, further steps to
make funding available are being considered.
The following questions and answers are from a FAQ
developed by the Governor’s Budget Office regarding the Administration’s
position on government operations during the budget impasse. These may prove
useful during your day-to-day interactions with constituents.
Will a budget impasse create any risks to the General
Answer: No. The Commonwealth will continue operations for
all critical functions that impact the health, safety and/or welfare of the
citizens of Pennsylvania.
Will a budget impasse affect public access to any
Commonwealth operated facilities?
Answer: No. The Commonwealth will continue operations for
Commonwealth-operated facilities, such as state parks, county assistance
offices, prisons, youth development facilities and PennDot locations.
What Commonwealth operations will be impacted by a budget
Answer: The Commonwealth will continue to make payments and
continue operations in all areas that affect the health, safety and protection
of Pennsylvanians or as required under Federal Law, state court decisions or the
Pennsylvania Constitution, including:
- Public benefit programs administered by the state,
including unemployment compensation, cash assistance support for Women
Infants and Children (WIC);
- Health care services paid for through Medical
Assistance for hospitals, other healthcare providers and nursing homes, and
transportation to medical appointments through the Medical Assistance
Transportation Program (MATP);
- Child care subsidy payments;
- Home and community-based services, including attendant
care for seniors and people with disabilities;
- Prescription drug coverage under the PACE program;
- Pension programs for Blind and Paralyzed Veterans;
- Medicare Parts A and B premium payments;
- Early intervention, autism and intellectual disability
- State Workers’ Insurance Fund payments; and
- Commonwealth employee payroll, including
What payments cannot be made during a budget impasse?
Answer: Most payments to vendors or to grantees for
programs or expenditures incurred during FY 2015-16 that are authorized through
the budget will be delayed until a budget is approved.
How will the budget impasse affect education funding?
Answer: To the extent these funds must be appropriated by
the General Assembly, payments will not be processed until a budget is approved
for FY 2015-16.
How will the budget impasse affect existing contracts?
Answer: Most state contracts include language addressing
this situation, which states that the Commonwealth’s obligation to make payments
shall be subject to the availability and appropriation of funds and that
contractors may not stop work or refuse to make delivery for non-payment. If the
Commonwealth’s untimely payment results in a default situation, the contract may
pursue remedies set forth.
Cautionary Notes on Several Commonwealth Funds
In his March budget, the Governor forecast robust FY
2015-16 Lottery Fund revenue growth of 9%, following a 2.5%
year-over-year decline in revenue in FY 2014-15. At the time, the Administration
cited an expansion of the retailer network, enhanced player convenience and new
games as drivers of the expected sales growth. Because the Governor was
ultimately unable to achieve that level of revenue growth, HB 1192 included $125
million of relief for Lottery programs by increasing General Fund
Despite a reduction of $180 million, or 11%, from the
Governor’s March revenue estimates, weekly Lottery Fund revenues have been $2
million below the revised estimate this fiscal year, on average. While it is too
early to predict a year-end shortfall, the year-to-date performance requires
that our Appropriations staff closely monitor collections. Large Powerball and
MegaMillions jackpots, along with robust, year-end holiday sales, can have a
dramatic impact on Lottery revenues.
Oil and Gas Lease Fund
Shortly after the Governor vetoed HB 1192, the Wolf
Administration indicated gas royalties from the Oil and Gas Lease Fund would be
lower than projected due to declines in natural gas prices. Gas royalties from
State Forest lands are the predominant revenue source for the Oil and Gas Lease
Fund and have dropped precipitously in tandem with natural gas prices. Following
two months of significant declines in royalty revenues, the Budget Secretary
recently requested $45 million from the Commonwealth’s General Fund to support
Department of Conservation and Natural Resources programs that normally receive
Oil and Gas funding. Through August, Oil and Gas Lease Fund revenues are nearly
60% below collections for the same period last fiscal year. Ongoing budget
negotiations will determine if this funding can be provided or if alternative
options will need to be developed.
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
By Appointment Only
Northern Lehigh County
North Whitehall Township Building
3256 Levans Road
Coplay, PA 18037
By Appointment Only