State Revenues Below Estimate Again

Pennsylvania's February revenue collections came in below estimate--a familiar theme for this fiscal year that ends June 30th. The total shortfall is now $476.7 million--or 2.9%.

State Senator Wayne Fontana says even though revenue estimates were conservative, a sluggish economy, job layoffs and economic fears have depressed both personal and corporate income taxes and sales tax revenues more than anticipated. He says the legislature is looking to trim any fat from state programs without hurting schoolchildren or the poor, and new sources of revenue are being explored. Closing the "Delaware loophole", whereby large corporations generate profits here but avoid Pennsylvania taxes by incorporating in Delaware, could bring in hundreds of millions of dollars, according to Fontana, and some of that money could go to reduce small business taxes, as well as closing the budget gap.

Governor Ed Rendell's proposal to lower the sales tax from 6 to 4% but expand it to the professional services of doctors, lawyers and consultants is meeting a lot of resistance, says Fontana, but there may be support for taxing things like chewing gum and smokeless tobacco. He says a consensus may be forming around a tax on Marcellus Shale natural gas extraction.