Friday, June 16, 2017

Potential shortfalls in the current fiscal year

Dorota Gasienica-Kozak, Esq., King, Spry, Herman, Freund, & Faul, LLC,
Public Policy Committee Chair


As we anticipate the Pennsylvania State budget for 2017-2018, we hear Republicans insisting no tax increases and no new borrowing to support current year expenses, preferring expanded gambling and further liquor sale reforms for new state revenue and reduction in state spending. Meanwhile, Democrats and Governor Wolf are promoting a plan to raise revenue for those and other causes through proposals for about 1 billion in new taxes, including a severance tax on natural gas production in the Marcellus shale region, the elimination of certain sales tax loopholes, and some changes to state business tax structures.

As business leaders, we must reflect on the outcome of the budget for the fiscal year 2016-2017 and its potential shortfall of over $1.2 billion plus. Unfortunately, a shortfall in the current fiscal year will likely be in excess of any projections for the entire fiscal year that ends on June 30, 2017. The areas of the shortfall are projected to result from various revenue sources that did not produce revenues as anticipated. Anticipated revenue shortfall sources include corporate tax revenues, personal income tax collections, sales and use tax, realty transfer tax, inheritance tax, gambling, tobacco, and state liquor code revenues, and non-tax revenue, which includes a larger transfer from the states liquor store fund which couldn’t offset a drop-off in unclaimed property collections. Such projections create a larger burden to find more revenue than anticipated. We will all be watching to see how our legislators propose to solve this question.

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