Shadowproof

PA Revenue Strong Midway Through Year; Tax Cut Could Have Big Impact

By Michael Wood, Third and State

With a strong December showing, the commonwealth now has a General Fund revenue surplus of $171 million (1.4% above estimate) for the first half of the 2012-13 fiscal year, double the Corbett administrationâ??s revised estimate for the entire fiscal year. The strong December collections exceeded estimate by $112 million (or 4.8%).

The increased revenue is a good sign of a modestly recovering national economy and a brightening of the stateâ??s fiscal picture going into the 2013-14 budget season. This is a nice change from previous years when midyear shortfalls triggered cuts to state services.

In December, personal income, corporate, and realty transfer taxes exceeded revenue targets by 10.1%, with sales, inheritance and other taxes (on cigarettes, alcohol, and table games) falling short of expectations by 2.8%.  

A similar picture exists over the first half of 2012-13 â?? corporate, personal income and realty transfer tax collections are a combined 5% higher than expected, while sales, inheritance, and other taxes have fallen 2.4% short of budget estimates.

One area of concern is that sales tax collections (the stateâ??s second largest tax source) are $125 million, or 2.7%, lower than projected. It is not clear the reason for this as vehicle sales and consumer spending have been increasing. Perhaps the new tax collections from some online retailers may not be as large as anticipated.

Compared to last year, collections are $583 million, or 5%, higher, with corporate ($254 million) and personal income tax ($186 million) collections making up most of the increase in 2012-13.

A few caveats going forward:

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