The Independent Fiscal Office Thursday released updated revenue estimates for FY 2016-17 and FY 2017-18 that are $820 million lower than estimates they released last year.
FY 2016-17 unrestricted General Fund revenues are estimated to be $31.61 billion, $900 million below the estimate issued by the IFO at the beginning of the fiscal year. Receipts for the current year are expected to increase by $709 million (2.3 percent) from the prior year.
“Each of the three largest General Fund revenue sources, corporate net income, sales and use and personal income taxes, underperformed in FY 2016-17,” Knittel noted. “Lower-than-expected collections largely are attributable to a decline in corporate profits and weak consumer spending. Income shifting from 2016 to 2017 in anticipation of lower federal tax rates also contributed to the variance between actual and estimated collections.”
FY 2017-18 unrestricted General Fund revenues are projected to be $32.49 billion, an increase of $880 million (2.8 percent) over FY 2016-17.
The projection is made on a current law basis, and it does not include the impact of proposed changes to statute.
House Republicans passed a budget on April 4 with a $31.52 billion spend number, which Senate Majority Leader Jake Corman (R-Centre) said Wednesday the Senate would like to match.
“The Pennsylvania economy is expected to grow moderately in FY 2017-18,” Knittel said. “Revenue growth for next fiscal year may receive a modest boost from the income shifting that likely reduced current-year collections. However, the overall growth rate will be constrained by the absence of one-time revenues received in FY 2016-17 and various technical factors.”
The updated projection for FY 2016-17 is $1.17 billion below the estimate certified by the administration at the beginning of the fiscal year.
Relative to the revenue projections contained in February’s Executive Budget presentation, these projections are $692 million lower for FY 2016-17 and $128 million lower for FY 2017-18, for a two-year difference of -$820 million.
These amounts exclude the proposed statutory changes identified in the Executive Budget.
There is an open question about whether the Commonwealth will receive the same level of federal funding in the year ahead with the Trump Administration proposing significant cuts to grants received by states.
Click Here for a copy of the revenue estimate report.