Secretary of the Department of Revenue Dan Hassell gave a glowing, growing report to the Pennsylvania House Appropriations Committee on Monday.
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State Rep. Lee James, R-Seneca, offered congratulations to Hassell with the secretary’s announcement that the Department of Revenue expects tax revenues for the fiscal year to be $425 million above original estimates.
“Overall, the economy continues to grow,” Hassell said. “As a result, our revenues continue to grow.”
James asked which tax collections were doing well, and why, since the Department of Revenue and the Independent Financial Office (IFO) have pronounced revenues to continue in the black.
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Hassell reported general fund revenues were $290 million ahead of estimates as of January 2019.
“Things that are doing well are corporate tax, in particular. It is significantly up from last year. And also, sales tax has been very strong this year,” he said in sworn testimony before the committee. Sales tax is running about 8 percent ahead of 2018.
Personal income tax is where they ran into “difficulty,” according to Hassell, who said the quarterly payments for January came in short.
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He believes the impact comes from the federal income tax reform law which passed in 2017.
The contributions of gaming to the commonwealth’s revenue stream prompted questions from several representatives.
Rep. Marcia Hahn, R-Wind Gap, said she had received calls from organizations wondering if games of skill are legal.
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“Those so-called games are not legal under current law. That is the opinion of the State Police,” Hassell said, adding that the department supports their position.
He and Lottery Executive Director Drew Svitko stated that unregulated and untaxed games of skill are having a detrimental impact on the lottery and casinos.
Svitko said “the presence of games of skills machines” in Pennsylvania establishments account for a $95 million loss in scratch-off game revenues.
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Rep. Stephen Kinsey, D-Philadelphia, wanted to know how the loss of revenue from scratch-offs affected the total lottery intake.
“The lottery is having a great year, this year,” Svitko said. “We’re on track for an all-time sales record, all-time profit record. We’re currently estimating, we’re about $50 million ahead of the same point last fiscal year. We’re expecting to end the year $20 million ahead of estimates.”
Rep. Jim Struzzi, R-Indiana, said he would like to see some of the online booking sales tax revenues come back to his county, which relies heavily on tourism and the hotel room taxes. He also talked about the craft breweries in Indiana County asking for equity in the per beverage and per barrel taxes.
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“We don’t want to stifle these young entrepreneurs, because craft breweries in Pennsylvania are new and they are bringing people to the communities,” he said.
Rep. Steve Samuelson, D-Bethlehem, who is also the Democratic Chair on the Aging and Older Adult Services Committee, said it has been 12 years since income limits were increased on the property tax rebates. He asked if the number of recipients of the rebate was known and if it was still near 600,000.
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According to Hassell, as individual income increases, some of the recipients do not make the income cut. In 2018, the number of recipients was 548,000.
“The time is now for the Legislature to address that,” Samuelson said. “Raise the income limits and keep pace with inflation.”
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Samuelson lauded the program, saying it gives seniors, people with disabilities, widows and widowers a rebate on last year’s property taxes or last year’s rent. There is an income limit to qualify for the program. For homeowners, it is $35,000, $15,000 for renters, and half the Social Security income is excluded.
