April tax collections bring more bad news for Pennsylvania

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HARRISBURG, Pa. (AP) – Another bad month of tax collections is deepening the state government’s budget hole, pushing its revenue shortfall to more than $1 billion for a fiscal year that ends in nine weeks.

The Department of Revenue said Monday that April’s tax collections came in at $537 million, or 13 percent, below expectations.

The growing gap could put more pressure on Democratic Gov. Tom Wolf to accept spending cuts or the Republican-controlled Legislature to raise taxes as they prepare a budget plan for the fiscal year starting July 1. Wolf’s proposed budget is $32.3 billion.

Allegheny County Rep. Joseph Markosek, the ranking Democrat on the House Appropriations Committee, said in a memo to his fellow House Democrats that April’s shortfall must serve as a wake-up call.

In January, the Legislature’s nonpartisan Independent Fiscal Office projected a shortfall of nearly $3 billion through next summer. But April’s results would push that shortfall to more than $3 billion.

The Department of Revenue attributed the shortfall, in part, to the U.S. economy recording its slowest quarter in three years.

It also said April’s shortfall was influenced by a change in law that shifted the due date for corporate net income tax from April to May. But even that shift would recapture only $200 million in May, according to legislative officials, still leaving the fiscal year’s shortfall in excess of $1 billion.

To help balance the budget, Wolf has eliminated several thousand positions in government and ordered the closure of the Pittsburgh State Prison, while proposing potentially touchy cuts to pharmaceutical reimbursements, school busing aid and grant money for the University of Pennsylvania’s veterinary school.

He also proposed a $1 billion tax plan that included imposing a new tax on Marcellus Shale natural gas production and extending the 6 percent state sales tax to custom software and data processing and commercial storage.

In early April, a divided House approved a Republican majority budget plan that would hold the line on taxes but order up deep cuts in aid to prisons, health care for the poor and child care subsidies. Counties accused the House GOP of shifting the burden of a tax increase to them to fund social services.

The House GOP’s plan still left a nearly $800 million hole, but Republican leaders said the bulk of it could come from steps to legalize a huge expansion of casino-style gambling and the private-sector sale of wine and liquor in the state. However, those ideas have hit opposition in the Senate.

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