By The Associated Press
10:00 PM EST, January 3, 2012
Halfway through Pennsylvania's fiscal year, the state government revenue shortfall is already approaching a half-billion dollars, according to revenue figures the Corbett administration released Tuesday.
Overall collections trailed estimates by 4 percent, or $487 million through December, and most major tax lines lagged estimates for the month and the year to date.
Gov. Tom Corbett's office said he has extended a pay freeze for thousands of nonunion management employees in the executive branch, as well as himself and members of his Cabinet, but it was unclear whether that would produce significant savings.
Corbett spokesman Kevin Harley said other austerity initiatives "will be forthcoming" from the administration, but he declined to elaborate.
The pay freeze, initially imposed under then-Gov. Ed Rendell in late 2008, saved $173 million through June 2011 by breaking with tradition and withholding from the nearly 13,000 nonunion managers raises equivalent to what union members receive, said Dan Egan in the Office of Administration.
However, even if Corbett had lifted the freeze, the nonunion employees would get no increase anyway because this first year of contracts negotiated with the Corbett administration provides no pay increases for the tens of thousands of union employees.
In the revenue picture, collections of corporate taxes were especially weak. Payments for the six months ending in June totaled $1.2 billion — $259 million, or nearly 18 percent, less than anticipated.
The personal-income and sales taxes, the biggest sources of general-fund revenue, also fell short of projections over that period — by 3.5 percent for the income tax and 0.5 percent for the sales tax.
A Revenue Department spokeswoman said officials are puzzled by the slump in corporate tax revenue.
Elizabeth Brassell said officials suspect it may reflect the unexpectedly heavy use of tax credits, which corporations are allowed to carry forward from previous tax years and which make corporate tax revenue forecasting difficult.
"That is the $100,000 question," she said.
Key legislators were circumspect about the December revenue report.
Sen. Jake Corman, chairman of the Senate Appropriations Committee, held out hope that typically heavy revenue collections in March and April would help bring the budget back into balance, but he lamented the "anemic recovery" of the state's economy.
"It makes budgetary decisions harder and harder," said the Centre County Republican.
Rep. Joseph Markosek, the ranking Democrat on the House Appropriations Committee, echoed Corman's hope that spring tax collections may put the budget back on track.
"Collections are behind the official estimate, but still above the same period last year," he said.
The $27.2 billion budget for 2011-12 slashed aid for education, held social-service spending steady despite a rising demand for services and did not raise taxes to cope with a drop in state revenues and the loss of federal stimulus money.