While Pennsylvania’s general fund revenue dropped 6.2% in March, the worst is yet to come from the COVID-19 pandemic, Revenue Secretary Dan Hassell said.
The commonwealth’s $4.4 billion of revenues was down $294.6 million from expectations, according to Hassell. Fiscal year-to-date general fund collections total $25.3 billion, he said, which is $45.6 million or 0.2% below estimates.
“The shortfall in March is only partially related to the COVID-19 outbreak,” Hassell said Wednesday. “We expect the pandemic will have a greater impact on revenues in the coming months, particularly in a month like April when many of the tax filing due dates are pushed back.”
Part of March tax revenues represent taxes paid for past periods, Hassell said. For example, about 60% of the sales tax remitted in March was for retail sales in February. There are also final payments with 2019 tax returns, representing activity last year.
In addition to business closures, withholding of income tax and sales tax have also fallen. These sources are below estimates in March by $20 million and $24.2 million, respectively, according to Hassell.
March revenues include estimated payments of corporate taxes for 2020. If businesses believe their income will be lower this year, they may cut their estimated payments, Hassell said. Corporation tax revenues in March are about $161.1 million below estimate.
State officials had expected payments of personal income tax to total about $2.1 billion during April, May and June. Most of this revenue will be delayed until July.
The effect of the pandemic on Wolf’s proposed $36.1 billion
Wolf, a second-term Democrat, works with a Republican legislature.
Also in question is the sufficiency of the state’s rainy day fund. Pennsylvania last year deposited $317 million of surplus revenue into the fund, raising its balance to roughly $341 million.
Fitch Ratings rates the commonwealth’s general obligation bonds AA-minus. Moody’s Investors Service and S&P Global Ratings rate Pennsylvania Aa3 and A-plus, respectively. All three have stable outlooks.
Wolf on Wednesday placed the entire state under a stay-at-home order, which will last at least through April 30. Nearly 1,000 new cases were reported.
