From PA Chamber of Business & Industry
The Commonwealth collected $1 billion more in tax revenue than ancitipated to close out the 2018-19 Fiscal Year. This allowed lawmakers to put $318 million into the state’s nearly depleted Rainy Day Fund, as well as help to fund numerous state-run programs, including public and higher education, without raising taxes on business or individual taxpayers.
A recent story in the Philadelphia Inquirer explains that this historic collection was due in large part to the federal tax reform law that was enacted in late 2017 and provided a much needed boost in employer optimism and confidence that resulted in higher than expected corporate profits. According to Independent Fiscal Office Executive Director Matthew Knittel, his office initially estimated $3.1 billion in revenue for the last fiscal year, but increased that estimate last month by $306 million. “I suspect that we had maybe underestimated the impact of those tax law changes,” Knittel admitted to the Inquirer. These positive results – along with the employer optimism expressed in the PA Chamber’s most recent Economic Survey – are why our organization is committed to working with lawmakers to enact comprehensive tax reforms at the state level when lawmakers return to session this fall.
The story also lists the taxation of internet sales and gaming expansion as two other factors that put revenue collection over the top in 2018-19.
In other good news, Knittel said that much of the additional revenue collected in the past year (with the exception of gaming) is permanent, meaning that higher revenues will continue to flow into state coffers without the need for additional taxes.
Republicans are also touting their commitment to holding the line on state spending as another factor that led to Pennsylvania’s banner Fiscal Year. At a news conference this spring, House Majority Leader Bryan Cutler, R-Lancaster, credited the increased revenue as being “one part of the impact of fiscal responsibility and sound policymaking.”