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Politics & Government

Pennsylvania Tax Collections Continue Rebound From Pandemic

Pennsylvania Budget
Matt Rourke
/
AP
FILE- In this Jan. 15, 2019, file photo an America flag flies at the Pennsylvania Capitol building in Harrisburg, Pa. In Pennsylvania, good fiscal times may not necessarily mean good fiscal condition. The rage in the state Capitol right now is the surplus that state government rolled up in the almost-ended fiscal year, helped by unexpectedly strong corporate and sales tax collections. That news alone is fueling requests from a legion of lobbyists with pet projects, but the momentary surplus has not necessarily changed views from the outside that Pennsylvania is a state with tall fiscal challenges.

Pennsylvania continued its rebound from the coronavirus pandemic, as the state reported Tuesday that tax collections through May were almost $3 billion ahead of expectations.

Collections for the state's main operating account were $36.6 billion through May, the 11th month of the fiscal year, the Department of Revenue said.

That is $2.9 billion, or 8.5%, above estimate, with another month to go until the 2020-21 fiscal year ends June 30. Last summer, budgetmakers had warned of a multibillion-dollar deficit because of the pandemic's impact.

In February, Gov. Tom Wolf, a Democrat, asked the Republican-controlled Legislature for a $37.8 billion budget for the 2021-22 fiscal year starting July 1.

The centerpiece is a $1.35 billion boost — or 20% — to help fix long-term inequities in how the state funds public schools. Wolf also wants to raise income taxes by billions of dollars on higher earners to help fill a projected deficit and cut taxes on lower earners.

In the meantime, Wolf and lawmakers must decide how to allocate $7.3 billion from the American Rescue Plan bill signed by President Joe Biden in March.

Last fiscal year, the state collected about $3.2 billion, or 10%, less than projected. To help fill gaps in this year's $35.5 billion state budget, Pennsylvania is counting on more than $3.3 billion in federal pandemic aid.