A Pennsylvania law requiring better tax-collection procedures has boosted income-tax receipts for most of the state's municipalities and school districts, said Moody's Investors Service.
Since Act 32 took effect in 2012, localities have recorded annual income growth of nearly 10%, Moody's said in a statement issued March 6.
"Local government income tax growth has far outpaced [gross domestic product] or income in Pennsylvania, confirming that much of the growth in this source is because of Act 32," said Moody's.
Pennsylvania governments, according to Moody's, are more reliant on income taxes than those in other states. Income taxes represent about 20% of municipal revenues and 5% of school district revenues in the commonwealth.
According to the U.S. Census Bureau, income taxes account for 4.4% of aggregate municipal revenue nationwide and, according to Moody's, only Kentucky and Ohio report higher municipal income taxes as a share of total revenues than Pennsylvania.
Moody's rates Pennsylvania's general obligation bonds Aa3. Fitch Ratings and Standard & Poor's rate them AA-minus.
