Last week I shared a chart tracking General Fund revenue collections compared to official estimates over the 2012-13 fiscal year. Here it is again.
Now for a bit more analysis.
As you can see, monthly collections came in below projections almost as often as they came in above, with year-end receipts totaling $57 million, or 0.2%, more than the annual estimate. The line in the chart above tracks the cumulative annual surplus or deficit in General Fund collections from month to month.
Midway through the fiscal year, it looked like the state was on track for a sizeable year-end revenue surplus, but lower-than-expected collections from January through March, along with a shortfall in June, let a bit of air out of that balloon. To give credit where it is due, whenever estimates are within 1% of final collections, the revenue estimators are doing a decent job.
Overall tax collections ended the fiscal year $13 million, or a scant 0.05%, below official estimates. There was a bit of variation among the state’s different tax streams.
The big story, in dollars and cents, was the $326 million, or 3.5%, shortfall in sales tax collections. In 11 of the 12 months in 2012-13, sales tax collections fell below estimate — a sign that the economy was not growing as quickly as had been anticipated back in June 2012. Compared to the prior year, sales tax receipts grew by only 1.4%. In normal economic expansions, sales tax grows by 3% to 5% a year. While the sale of motor vehicles made up only 13% of total sales tax revenue in 2012-13, it accounted for 38% of the shortfall in the tax.
Corporate income taxes ended the year $275 million, or 5.6%, higher than expected. The corporate net income tax (CNIT) accounted for most of this surplus — $219 million. CNIT was up almost 20% from the previous year, due in part to continued strong corporate profits. Another factor may have to do with additional taxes paid in 2012-13 by companies that took advantage of 100% bonus depreciation in 2011. This temporary federal tax incentive, which Pennsylvania also adopted, allowed businesses to write off the cost of equipment in the year of acquisition rather than stretching it out over a period of years as is normally done.
Personal income tax (PIT), the state’s largest single revenue source, exceeded estimate by $86 million, or 0.8%. Realty transfer tax (RTT) ended the year $19 million, or 6%, above estimate, as the real estate market began to slowly recover from the aftermath of the housing crisis and Great Recession. Both of these taxes showed healthy growth from the prior fiscal year. PIT increased by $571 million, or 5.3%, while RTT increased by $47 million, or 15.9%, from 2011-12 collection levels.
Liquor taxes — totaling $311 million — and profits from the state liquor stores — $80 million in 2012-13 — came in on target. Liquor tax collections increased $13 million, or 4.4%, from the prior year.
Cigarette, beer, and table game taxes came in a combined $53 million below estimate for the fiscal year. The collections of all three of these taxes declined from 2011-12 levels.
Inheritance tax collections were $17 million lower than estimate in 2012-13, but $18 million higher than in 2011-12.