When Pennsylvania's tax collections for April are officially announced on Monday, legislators expect the total to fall about $400 million short of expectations, increasing the state's current $719 million shortfall to over $1.1 billion.
There are two months left in the 2009-2010 Fiscal Year.
April will be the 21st consecutive month Pennsylvania's tax collections have come up short of projected figures.
"We remain optimistic that the taxes which come in by [the close of business Friday] will be very robust, but realistically we know we will post another revenue shortfall this month," said Johnna Pro, press secretary for the House Appropriations Committee. She declined to discuss specific figures, but said sales tax revenue is "not as bad as many people think", which she called a positive sign for the state's economy.
At the end of March, Pennsylvania was facing a $719 million budget deficient, equal to 3.5 percent of the $27.8 billion general fund budget for the current fiscal year, which ends June 30.
The state Department of Revenue declined to comment on the tax collection numbers before official figures are released Monday morning.
Gov. Rendell's proposed budget for next year asks for a spending increase of $1.2 billion, and assumes a $500 million deficit at the outset. The state House passed the governor's proposed $29 billion budget for the next fiscal year last month, but it has not been taken up by the Senate.
Ms. Pro said the budget passed by the House could be balanced without cuts even if the deficit reached $800 million by June 30. If that figure is passed, revenues will have to be increased or programs will have to be cut, she said.
State Sen. Jake Corman, chair of the Senate Appropriations Committee, said the deficit would not be closed without an increase in taxes or spending cuts.
"At the end of the day, it comes back to unemployment. When the unemployment numbers start going down, that's when the recession is winding down. When employers start employing people again, then we'll be on the road to recovery," said Mr. Corman last week.
Pennsylvania has seen an increase in unemployment in 21 of the last 22 months.
The state Revenue Department on Friday said they have collected $12 million in back taxes from more than 10,000 individuals and businesses through the tax amnesty program launched this week. However, those funds will not close the tax collection deficit because the current budget assumes revenue of $190 million from the tax amnesty program. The program would have to collect more than that total to begin closing the budget deficit, and collecting less than $190 would actually make the deficit even worse, said Stephanie Weyant, a spokesperson for the Department of Revenue, on Monday.
When the budget process begins in earnest, state legislators will be looking to fill a total deficit that will exceed $2 billion. On top of the tax collection shortfall, the state is facing a $472 million shortfall from the federal government's denial of tolls for Interstate 80, and an $800 million shortfall created when Commonwealth Court ordered the legislature to return money taken from the state's M-Care fund, used to cover malpractice lawsuits, which the legislature raided last year to balance the General Fund budet.
Eric Boehm is a reporter for Pennsylvania Independent. He can be reached at Eric@PAIndependent.com
