Corporate tax income surge may help state’s outlook for its budget

HARRISBURG — The state’s budget picture could be less bleak — at least in the short-term — according to one independent analysis.

Facing a budget shortfall most recently estimated at about $1.5 billion, the commonwealth’s Independent Fiscal Office says the state has more revenue so far this year than expected, and has revised its revenue forecast to reflect an additional $594 million.

The analysis by the Independent Fiscal Office found unexpected bumps in corporate net income tax payments worth $334 million and an extra $220 million in unclaimed property revenue.

It’s unclear what’s driving the increase in corporate payments, said IFO executive director Matthew Knittel, and thus the office is not assuming the trend will continue to the next fiscal year.

“The implications going forward for the budget are unclear,” Mr. Knittel said.

The bump in funds from unclaimed property is due to a policy change that took effect with the budget that lawmakers passed last year.

It shortened the amount of time that unclaimed property such as abandoned bank accounts would be held before being turned over to the state. That’s one-time revenue, Mr. Knittel said, and historically, about 50 percent of it has to be paid back.

The office hasn’t revised its deficit estimate from the roughly $1.5 billion it told lawmakers to expect during budget hearings earlier this year, however.

“The structural deficit is more of a long-term phenomenon,” Mr. Knittel said. “The revisions that we are making now are short-term, but longterm, it’s unclear how it’s going to play out.”

The Independent Fiscal Office is independent of both the governor and the Legislature and serves to provide impartial budget analysis.

The report released Monday provided initial revenue projections for the fiscal year that begins July 1.

The office’s final estimate is due June 15.

The report is available online at ifo.state.pa.us.

Kate Giammarise: kgiammarise@post-gazette.com or 717-787-4254 or on Twitter @KateGiammarise.