By Peter N. Calcara, vice president – government relations

The clock is winding down on Pennsylvania’s current fiscal year, which ends June 30. In February, Gov. Tom Wolf presented his $34.1 billion spending plan for the 2019-2020 fiscal year. The proposal, which calls for a nearly 3 percent increase in spending over the current year budget and no broad-based tax increases, was generally well received by Democrats and Republicans in the General Assembly.

Given the fiscal and political challenges of the past four budgets, as well as the changing landscape in both the House and Senate, the hard-to-shake skeptic in me says the budget process will go down to the wire, if not a little past the July 1 start of the new fiscal year.

However, this year, there is a rare twinge of optimism that hasn’t yet evaporated: there is a chance, it seems, that we will have a budget in place before the end of the fiscal year. It’s hard for me to believe, but it could happen. Here’s why: as I alluded to earlier, the optimism from February seems to have carried into June. From discussions the PICPA has had with caucus leaders and rank-and-file members, the talk is more about an early budget rather than it being late. This is not typical for June. The fact is, however, that there is very little to fight over in Wolf’s original $34 billion plan. Sure, maybe it spends too much in certain programs and services than Republicans would like, but overall, the spending priorities are in line with most state lawmakers of both parties.

A second barometer of early success is the Pennsylvania Independent Fiscal Office’s (IFO) updated revenue estimates.  The report provided mostly good news for state lawmakers, as it estimates $860 million more in revenue this year than initially anticipated. This improvement is due in large part to strong corporate earnings and a spike in internet-based tax receipts. IFO’s June 2018 General Fund revenue estimate for the 2018-2019 fiscal year was $33.9 billion. Based on actual revenue collections through April 2019 and projections for the remainder of the fiscal year, the revised estimate for the current fiscal year is up by $866 million.

According to IFO, increases largely occurred across four revenue sources: corporate net income tax collections are projected to grow at a rate of 17.9 percent for the 2018-2019 fiscal year; nonmotor vehicle sales and use tax collections are expected to exceed the original estimates by $245 million due to higher-than-anticipated collections from marketplace vendors under Act 43 of 2017; nonwithheld personal income tax collections are $121 million higher than expected; and license and fee revenue will exceed the official estimate by $88 million due to greater collections related to gaming expansion.

While state lawmakers spend the next month focused on the budget and related legislative measures, the PICPA government relations team will be working on positioning portions of our legislative agenda for votes before the summer recess. Two of these bills—House Bill 17 and House Bill 706—would establish a 10-year statute of limitations on the collection of assessed taxes and allow a combined income tax return for an estate and revocable trust, respectively. House Bill 17 is pending before the state House, while House Bill 706 passed the House in April and is pending in the Senate Finance Committee.

The PICPA makes it easy for you to be in the know through our weekly Legislative Update e-newsletter or by attending our annual Day on the Hill event, which is scheduled for June 11, 2019. If you attend Day on the Hill, you will hear directly from Sen. Pat Browne, CPA, chair of the Senate Appropriations Committee, and Rep. Matthew Bradford, Democratic chair of the House Appropriations Committee, regarding the latest on state budget negotiations and more.

June is always a busy month in Harrisburg for state lawmakers and the PICPA. It’s easy to get lost in the rapid pace of legislative activity, but it is important that you stay informed and aware of what is happening because it impacts your business and your clients.

Sign up for weekly professional and technical updates in PICPA's blogs, podcasts, and discussion board topics by completing the form here.