Pa. revenue numbers raise big question about 2009-10 budget
An Associated Press article this week reporting that Pennsylvania general fund revenue collections for May came in nearly $125 million below projections provided the latest evidence that this year's state budget preparation for the 2010-11 fiscal year that begins July 1 probably won't be harmonious.
In fact, with the latest shortfall leaving the state $1.2 billion — 4.8 percent — below assumptions for the current fiscal year that ends June 30, the 2010-11 budget negotiations could be downright nasty — as they were when the current budget was being prepared.
Even the commonwealth's in-progress tax amnesty program, which has received 32,784 completed or in-process applications disclosing $76.9 million in previously unpaid Pennsylvania back taxes, provides little consolation for the existing budget morass. The 54-day tax amnesty program, which began April 26, is expected to reap only $190 million by June 18.
As far along as the amnesty program is, that $190 million revenue estimate might end up being overinflated, as so many other estimates tied to the 2009-10 state budget are turning out to be.
With so many missed projections, it is cause to wonder whether state lawmakers and the governor's office were guilty of a deliberate budget charade for the current fiscal year, just to get the current budget passed, months after the constitutionally mandated June 30 deadline.
Now, with the news of the $1.2 billion year-to-date shortfall, which could grow between now and June 30, the AP reports that "the weak (general fund) numbers are an ominous sign for the always contentious state budget talks that will accelerate over the coming weeks."
The key words in that quote are "accelerate over the coming weeks." Less than four weeks before the budget deadline, lawmakers and Gov. Ed Rendell should be talking about being close to a budget accord, rather than just getting serious about the task at hand.
But the two sides have been relentless in their penchant for budget warfare throughout the Rendell years, and this year — Rendell's last year in office — is shaping up to be no different, despite the electorate's unhappiness about the way business is conducted in Harrisburg, and despite this being a legislative and gubernatorial election year.
But back to the question of whether lawmakers and the governor intentionally overinflated 2009-10 incoming-revenue projections to finally end last year's budget stalemate that lasted until almost the end of 2009. With President Barack Obama boasting about the progress that has been made over the past year in reversing the troubled national economic picture, it would seem that Pennsylvania should be feeling some of the positive financial effects of that purported recovery.
Some of the latest major year-to-date numbers, right from the desk of Secretary of Revenue C. Daniel Hassell, indicate otherwise. For example:
• Sales tax collections total $7.3 billion, which is $369.8 million, or 4.9 percent, less than anticipated.
• Personal income tax collections total $8.9 billion, which is $311.1 million, or 3.4 percent, below estimate.
• Corporation tax collections total $4 billion, which is $484.6 million, or 10.7 percent, below estimate.
While it is difficult to make accurate revenue projections, lawmakers and the governor should have been more conservative last year in projecting income, and sought ways to save additional money, to ease the burden regarding the 2010-11 budget. It's clear now that they were significantly off base in their projections and that raises reasonable suspicions about the current budget being unrealistic — or a sham, in terms of the money coming in.
Harrisburg has much to prove to state residents to improve their opinion regarding state government. Twenty-six days before the budget deadline, little or nothing has been accomplished to ease residents' increasing anger and frustration.
It's true that many budget decisions are made by legislative leaders behind closed doors, and presumably behind-the-scenes negotiations are under way. But whether those negotiations have gotten serious yet is the big question.
Unfortunately, if lawmakers and the governor are following last year's budget road map, they haven't even gotten the budget vehicle out of neutral. And, time will tell whether 2010-11 revenue estimates will be as unrealistic as this year's numbers have proven to be.