Pennsylvania Tax Collections 10% Above Previous Estimates

By Anthony Hennen | The Center Square

(The Center Square) – Though experts are concerned about a higher chance of a recession, Pennsylvania’s tax collections remain healthy and better than a year ago.

As noted in October’s monthly revenue update, the Independent Fiscal Office reported that General Fund collections were about $277 million (9.7%) above expectations for October and about $861 million higher (7.1%) for the fiscal year to date. 

“??The monthly overage is primarily due to stronger than anticipated sales and use tax (SUT) and personal income tax (PIT) revenues,” the IFO report read.

Revenues from the corporate net income tax were also $16 million (10.2%) above estimates, boosting October collections to $176 million. Non-tax collections were also up by $21 million (87.5%) for $45 million in October, making overall revenues rosier.

The underestimate continues the pattern for the Independent Fiscal Office.

The IFO’s predictions for tax collections have been reliable overall in recent years, if a bit cautious, as The Center Square previously reported. The office is more likely to underestimate collections than overestimate.

Last year, collections were about 20% higher than estimates. Differences tend to come from sales taxes and personal income taxes driving revenues higher, but its models have warned of declining revenues in the future – transforming a budget surplus into a budget deficit if lawmakers aren’t careful.

While unemployment is down and monthly payroll gains are above levels before COVID-19, the labor force unemployment rate is still lower than it was before the pandemic hit. Last month, the IFO warned that experts have predicted a 60% chance of a recession within the next year.