(The Center Square) – The monthly tax revenue update from the Independent Fiscal Office once again showed Pennsylvania collections were healthy and exceeded original estimates, but it doesn’t mean Republicans and Democrats are any closer to agreeing on how to spend the money.
The IFO published estimates in August, but April tax collections for the General Fund exceeded the estimate by $2 billion (44%), making the fiscal year-to-date collections $5.04 billion (14.2%) higher than expected.
Personal income tax and corporate net income tax payments were “very strong,” the IFO noted, coming in at 59% and 75% above estimates for April, respectively.
“After this month’s collections, Pennsylvania revenues are so far ahead of estimate that we already have the money in the bank to pay for the historic investment I want to make in K-12 education, as well as the Corporate Net Income Tax cut and reforms I have proposed to bolster Pennsylvania businesses,” Wolf said in a press release.
The good times are here, Wolf argued, and the state government can take more action to achieve its goals.
“It has taken a lot of hard work and a lot of years, but our state government is frankly swimming in cash right now and we need to reinvest it in things that will make Pennsylvanians’ lives better,” Wolf said.
Republicans, however, are less optimistic about the revenue numbers. They point to a report from the National Association of State Budget Officers showing Pennsylvania’s lagging rainy day fund. While the median rainy day fund balance as a percent of general fund expenditures is 11.9% and has grown steadily since 2017, Pennsylvania’s rainy day fund is only 7.4%, a decline from 8.4% last year.
They are also concerned about a recession in the near future.
“Last week’s news that the U.S. economy contracted 1.4 percent in the first quarter – putting us directly on the edge of a recession – on top of record inflation, means today’s revenue numbers necessarily underscore the need to use caution when putting together a fiscally responsible spending plan,” said Jason Gottesman, press secretary to House Majority Leader Kerry Benninghoff.
“We are fiduciaries of taxpayer dollars and Pennsylvanians depend on us to use their money wisely and for their benefit. We have the opportunity now to look at what is ahead of us, learn the lessons of the past, and create a sound fiscal plan for the Commonwealth for years to come,” Gottesman said.
