March State Revenues $294.6 Million Less Than Estimate; $45.6 Million Less For Fiscal Year

On April 1, the Department of Revenue reported Pennsylvania collected $4.4 billion in General Fund revenue in March, which was $294.6 million, or 6.2 percent, less than anticipated. 
            Fiscal year-to-date General Fund collections total $25.3 billion, which is $45.6 million, or 0.2 percent, below estimate.
            “The shortfall in March is only partially related to the COVID-19 outbreak. We expect the pandemic will have a greater impact on revenues in the coming months, particularly in a month like April when many of the tax filing due dates are pushed back,” Revenue Secretary Hassell said. “We will continue to monitor the situation closely and work with the Governor and members of the General Assembly so that they have the latest information as it becomes available.”
            Below are other key points to keep in mind when analyzing March revenues and the forecast for the remainder of the fiscal year:
            Part of March tax revenues represent tax paid for past periods. For example, approximately 60 percent of the sales tax remitted in March was for retail sales in February. There are also final payments with 2019 tax returns, representing activity last year.
            As noted, only a portion of the shortfall in March is due to the economic impacts of business closures and decreased consumer spending. As businesses have closed and laid off workers, withholding of income tax and sales tax have also fallen. These sources are below estimate in March by $20 million and $24.2 million, respectively.
            March revenues also include estimated payments of corporation tax for 2020. If businesses believe that their income will be lower this year, they may cut their estimated payments. Corporation tax revenues in March are approximately $161.1 million below estimate.
             A portion of the March shortfall is due to the delayed depositing of paper checks while the Department of Revenue’s offices are closed. This revenue is expected to be recouped in the near future. 
            The department anticipates the effect of the pandemic will be greater in the coming months, in part because of extensions of filing deadlines, including for personal income tax returns and payments. Annual and quarterly payments of personal income tax were expected to total approximately $2.1 billion during April, May and June. Most of this revenue will be delayed until July.
            Here is an overview of March revenues by tax type:
            Sales tax receipts totaled $839.2 million for March, $24.2 million below estimate. Year-to-date sales tax collections total $8.5 billion, which is $68.2 million, or 0.8 percent, more than anticipated.
            Personal income tax (PIT) revenue in March was $1.1 billion, $120.6 million below estimate. This brings year-to-date PIT collections to $9.8 billion, which is $14.9 million, or 0.2 percent, below estimate.
            March corporation tax revenue of $2.2 billion was $161.1 million below estimate. Year-to-date corporation tax collections total $4.1 billion, which is $246.8 million, or 5.7 percent, below estimate.
            Inheritance tax revenue for the month was $116.1 million, $20.6 million above estimate, bringing the year-to-date total to $867.4 million, which is $65.8 million, or 8.2 percent, above estimate.
            Realty transfer tax revenue was $38.6 million for March, $4.9 million below estimate, bringing the fiscal-year total to $405.1 million, which is $9.6 million, or 2.4 percent, more than anticipated.
            Other General Fund tax revenue, including cigarette, malt beverage, liquor and gaming taxes, totaled $58.8 million for the month, $1.9 million above estimate and bringing the year-to-date total to $1.3 billion, which is $8 million, or 0.6 percent, above estimate.
            Non-tax revenue totaled $117.1 million for the month, $6.3 million below estimate, bringing the year-to-date total to $401.7 million, which is $64.6 million, or 19.2 percent, above estimate.
            In addition to the General Fund collections, the Motor License Fund received $217.7 million for the month, $6.5 million below estimate. Fiscal year-to-date collections for the fund — which include the commonly known gas and diesel taxes, as well as other license, fine and fee revenues — total $2 billion, which is $21.3 million, or 1 percent, below estimate.
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