HARRISBURG, PA — Pennsylvania concluded the 2023-24 fiscal year with a robust $45.5 billion in General Fund collections, surpassing estimates by $862.9 million, or 1.9 percent. Revenue Secretary Pat Browne announced these figures, noting that final collections fell within the 2 percent range the Department of Revenue aims for in its forecasts.
Breakdown of Key Revenue Streams
Sales Tax
Sales tax receipts reached $1.2 billion in June, exceeding expectations by $43.6 million. For the entire fiscal year, sales tax collections totaled $14.3 billion, which is $243.3 million, or 1.7 percent, above projections. This overperformance is attributed to stronger-than-anticipated economic activity in May and a shift towards more frequent monthly payments instead of quarterly ones.
Personal Income Tax
In June, personal income tax (PIT) revenue amounted to $1.5 billion, slightly above the estimate by $12.0 million. However, the fiscal year’s total PIT collections stood at $17.9 billion, which is $134.9 million, or 0.7 percent, below expectations.
Corporation Tax
June’s corporation tax revenue was $469.5 million, falling short by $54.1 million. Despite this monthly shortfall, fiscal year-to-date corporation tax collections totaled $8.0 billion, which is $180.2 million, or 2.3 percent, above estimate. The June deficit was mainly due to weaker corporate net income tax (CNIT) payments, with the second-quarter payments for tax year 2024 coming in lower than expected.
Other Notable Revenue Streams
- Inheritance Tax: Inheritance tax revenue reached $120.7 million in June, narrowly surpassing the estimate by $0.6 million. The fiscal year total was $1.6 billion, which is an impressive $156.1 million, or 10.5 percent, above estimate.
- Realty Transfer Tax: Realty transfer tax collections for June were $51.9 million, exceeding the estimate by $3.0 million. The fiscal year total was $530.8 million, which is $20.2 million, or 3.9 percent, over the forecast.
- Other General Fund Taxes: Revenue from cigarette, malt beverage, liquor, and gaming taxes totaled $159.3 million in June, falling short by $18.6 million. For the fiscal year, these taxes brought in $1.6 billion, which is $92.7 million, or 5.6 percent, below expectations.
- Non-tax Revenue: Non-tax revenue for June was $75.2 million, surpassing estimates by $50.7 million. The year-to-date total was $1.6 billion, which is $490.8 million, or 43.9 percent, above projections. Treasury receipts alone exceeded estimates by $51 million in June.
Motor License Fund
In addition to the General Fund, the Motor License Fund received $308.9 million in June, outperforming the estimate by $37.1 million. For the fiscal year, collections totaled $3.2 billion, which is $43.1 million, or 1.4 percent, above forecast. This fund includes revenues from gas and diesel taxes, as well as various license fees and fines.
Pennsylvania’s Financial Prosperity
Exceeding revenue forecasts is significant for Pennsylvania’s financial health. It indicates strong economic performance and effective tax collection mechanisms. The surplus can provide additional resources for public services, infrastructure projects, and debt reduction. Moreover, consistent revenue growth helps maintain the state’s credit rating, which can reduce borrowing costs.
Opportunities and Challenges Ahead
The higher-than-expected revenue could lead to increased investments in public services such as education, healthcare, and transportation. It also gives the state greater flexibility to address unforeseen expenses or economic downturns. Lawmakers might consider using the surplus to bolster the state’s rainy-day fund, ensuring financial stability in uncertain times.
However, some revenue streams, like personal income tax and corporation tax, showed mixed results, highlighting areas that might need closer monitoring and adjustment in future budgets.
Pennsylvania’s better-than-expected revenue collections for the 2023-24 fiscal year reflect a resilient economy and effective fiscal management. As the state moves forward, these positive figures provide a strong foundation for continued growth and investment in essential public services.
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