April 2016

General Fund revenue collec-tions for the month endedMarch 2016 totaled $4.49 bil-

lion, which was $86.7 million, or2.0%, above the monthly estimate.Fiscal year-to-date collections total$22.2 billion, which is $147.4 million,or 0.7%, above estimate for the year.Fiscal year-to-date General Fund rev-enue collections are $529 million, or2.4%, ahead of last year at this time.March is typically the largest revenuecollection month of the year.

Corporate net income (CNI) taxcollections were $17.1 million, or3.7%, below estimate for the month.Regular (i.e. annual) CNI tax pay-ments were over estimate by $17.2million, or 9.7%. However, quarterlyestimated payments due in Marchwere $34.3 million, or 11.9%, belowestimate. March is the first quarterlyinstallment month for calendar yeartax filers. Other quarterly paymentsfor the 2016 tax year will be due inJune, September and December. Theweakness in March quarterly pay-ments could translate into weak quar-terly payments in June when thesecond quarterly installment for 2016is due.

Gross receipts tax (GRT) revenueswere above estimate by $70.2 million,or 6.0%, for the month, and GRT rev-enues are $78.1 million ahead of esti-mate for the year. Most GRT iscollected in March, and it appearsthat the $1.29 billion in revenues col-lected thus far this year will beenough to end a three-year trend ofdeclining gross receipts tax revenues.In fact, FY 2015-16 GRT revenueswere expected to decline by 1.9%

General Fund Revenue Collections, $86.7 Million, or 2.0%, Above the Monthly Estimate

from FY 2014-15. However, at the endof March, GRT revenues are 4.0%more than revenues at this same timelast year.

Financial institutions tax (i.e. bankshares tax) was below the monthlyestimate by $8.6 million, or 2.9%, forMarch. The overwhelming majorityof the tax is due in March, and so theshortfall will not be repeated in theremaining months of the fiscal year.The Governor has proposed to in-crease the bank shares tax rate from0.89% to 0.99% for 2016 to achievethe revenue neutrality intended withthe enactment of Act 52 of 2013.

Sales and use tax collections (SUT)were over estimate by $24.6 million,or 3.4%, for the month. General salesand use tax was $23.1 million, or3.8%, above estimate, while sales tax

on motor vehicles beat the estimateby $1.5 million, or 1.3%. Total salesand use tax collections to-date for FY2015-16 exceed the estimate by $27.8million, or 0.4%. SUT collections are3.6% ahead of last year. The Gover-nor’s Official Estimate predicted 3.5%annual growth.

Personal income tax collections(PIT) were below estimate by $1.6 mil-lion, or 0.1%, for the month. March2016 employers’ withholding collec-tions totaled $962.3 million, whichwas $4.7 million, or 0.5%, above esti-mate. Individual estimated PIT collec-tions were above estimate by $3million, but PIT payments on annualtax returns were $9.4 million lowerthan expected. The bulk of PIT annualpayments will be due by April 15.

Senate Appropriations Committee, Pat Browne, Chairman

General Fund Revenue CollectionsFiscal Year 2015-2016

Revenue Comparison with Last Year

Continued...

• Page 2April 2016

Hopefully, the lackluster performancein March annual PIT collections willpick up in April.

Realty transfer tax (RTT) collec-tions underperformed the estimateby $3.3 million, or 9.6%, for themonth. RTT is now $5.4 million, or1.5%, above estimate for the year. In-heritance tax collections were aheadof the estimate by $11.6 million forthe month, or 13.5%, and they arenow $31.3 million, or 4.7%, above es-timate for the year. Cigarette tax rev-enue exceeded the estimate by $2.7million for the month, and liquor taxcollections were $362,626 higher thanestimate. Table games tax revenue ex-ceeded the monthly estimate by$83,627, or 1.0%.

General Fund non-tax revenue col-

lections were ahead of the estimateby $25.5 million.

The year-to-date revenue surplus,as stated above, is $147.4 million,which is certainly good news. An ex-amination of the past several fiscalyears indicates that in years wherethere was a revenue surplus in Marchthose fiscal years ended with a sur-plus. In all cases, except FY 2007-08which was the beginning of the eco-nomic downturn, the year-end sur-plus was increased from the Marchsurplus amount. The review of thishistorical data does not reveal anypattern that would enable us to reli-ably project a June 30, 2016 surplus.

We are cautiously optimistic thatthe current revenue surplus may in-crease modestly by year’s end. A sig-

nificant increase in the surplus is notanticipated because sales tax and PITreceipts are not significantly outper-forming the estimate and weak PITannual payments in March couldcarry over into April. In addition, thebulk of the March surplus was in thegross receipts tax which will notrecur in coming months. Revenue re-ceipts are monitored on a daily basis,and committee staff will prepare up-dated forecasts for fiscal years 2015-16 and 2016-17 throughout theremainder of the fiscal year.

Motor License Fund collectionswere $22.6 million, or 9.2%, higherthan the estimate for the month ofMarch. The Motor License Fund isnow $10.8 million, or 0.6%, below es-timate for the year

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Budget Becomes law Without Governor’s Signature, Fiscal Code Vetoed

• Page 3April 2016

Senate Appropriations Committee, Pat Browne, Chairman

Fiscal Year 2015-16Performance of Major Tax Types

Above/Below the Monthly Estimate

Now that the budget for FY 2015-16 is essentially completed, we must focus on analyzing the spending needs forFY 2016-17. An integral part of the process is the development of a cost-to-carry budget for FY 2016-17 with a carefulexamination of the cost drivers. Perhaps the largest cost driver in the budget is the Department of Human Servicesand in particular the Medical Assistance program. Pennsylvania’s demographics indicate that we will see increasedpressure in our long-term care and home and community-based services programs as our population ages. The fol-lowing charts show some perspective as to how caseloads have increased over the past year. The increases resultfrom a combination of additional persons becoming eligible for medical assistance under the Affordable Care Actand a shift away from more expensive nursing home care for the elderly and disabled.

• Page 4April 2016

• Page 5April 2016

General Fund Tax CollectionsYear-to-Date Revenue Comparison

with Official Estimate

Senate Appropriations Committee, Pat Browne, Chairman

Senate Appropriations Committee, Pat Browne, Chairman

General Fund Tax CollectionsFiscal Year 2015-16

Comparison of Official Estimate with Actual Revenue by Month

• Page 6

Senate Appropriations Committee, Pat Browne, Chairman

April 2016

General FundYear-to-Date Revenue Compared with Prior Year

Senate Appropriations Committee, Pat Browne, Chairman

Oil and Gas Lease FundYear-to-Date Revenue Compared with Prior Year

April 2016 • Page 7

Appropriations Committee Monthly Revenue Report