General Fund collections in September exceeded revenue targets by $15 million, creating a very modest fiscal-year-to-date surplus of $13 million, 0.2% over estimate.
Collections in September are important to monitor as it is the first month of the fiscal year in which significant collections of quarterly personal income and corporate net income taxes are made. So far, so good, as corporate taxes came in $8 million below estimate for the month, while personal income tax collections exceeded estimate by $8 million.
Sales tax collections, which came in $21 million over estimate in August, fell $880,000, or 0.1%, below estimate in September. For the fiscal year, sales tax collections are still $20.6 million, or 0.9% over estimate.
Realty transfer and inheritance taxes both exceeded estimate in September — by $6 million and $3 million, respectively. For the fiscal year, inheritance taxes are 0.1% below estimate, while realty transfer taxes are now $6 million, or 6%, over estimate.
Non-tax revenues (permits, fines, and interest collections) were $9.2 million, or 67%, above estimate in September. This helped reduce but not erase the fiscal-year-to-date shortfall in these types of payments. Through the first quarter, non-tax revenue is $4 million, or 8%, below estimate.
Compared to the prior fiscal year, collections in September were $1.6 million, or 0.1%, lower. For the fiscal year, revenues have grown by $41 million, or a meager 0.7%. This slow growth is due in large part to the cost of state corporate tax cuts.
Despite growth of $146 million in personal income and sales tax revenue in the first quarter of 2013-14 over the first quarter of 2012-13, corporate tax collections declined by $79 million, or 15%. This is not unexpected as the capital stock and franchise tax rate was cut by more than half for 2013 (from 1.89 mills to 0.89 mills). For the fiscal year, corporate taxes are $116 million, or 17%, lower than they were in the first quarter of 2012-13.
The phase down of the capital stock and franchise tax over the next few years will likely mean that total corporate tax collections will continue to shrink. At the same time the state has cut funding to education, health care, and other services, corporations are paying less in taxes each year.
Despite reduced corporate taxes, Pennsylvania has not seen new jobs. The latest jobs report indicates Pennsylvania's unemployment rate was 7.7% in August, while the national rate stood at 7.3%.