Study Says PA’s Tax Revenue Rebound Lagging, But State Official Optimistic

By Dave Fidlin | The Center Square

More than a year after the onset of COVID-19, more than half of all states reported tax revenues equal to, or greater than, pre-pandemic levels, according to a new study. But Pennsylvania was not among them.

In its latest report on tax recovery efforts within the U.S., Pew Charitable Trusts concluded tax revenue grew enough by February to mitigate the most severe losses in the early months of the pandemic.

“This means that for states collectively, cumulative tax revenue since the onset of COVID-19 reached pre-pandemic levels for the first time, though without adjustments for inflation,” Pew researchers Barb Rosewicz, Justin Theal and Alexandre Fall wrote in the jointly authored report.

Within the 12-month sample period, however, Pennsylvania remained in the negative in year-over-year comparisons throughout the entire time frame.

In March 2020, for example, tax revenue declined 2.4 percent, compared to the year prior, and peaked the following month at a 26 percent drop.

Double-digit declines within Pennsylvania continued in May and June, while lockdowns were most heavily enforced, before rebounding to single-digit percentage losses in the following months.

In the first two months of 2021, the state’s tax revenue losses were 4 percent and, by February, 2.4 percent.

While most states experienced sharp tax revenue declines in the earliest phases of the pandemic last spring, the rebounds have since been starkly different throughout the country.

By February, Idaho reported an 11 percent increase in tax revenue, compared to the year prior, while Utah followed behind with a reported increase of 8.7 percent.

The two states off the mainland reported the sharpest losses early this year, with Alaska reporting a 49.2 percent decline in February and Hawaii grappling with a 17.4 percent drop the same month.

Despite the still-gloomy figures in February, Pennsylvania Revenue Secretary Dan Hassell reported continued improvements in the freshest set of data available through April.

Throughout the month, Hassell said his office collected $4 billion in general fund revenue, which was $28.2 million, or 0.7 percent, more than anticipated.

“The good news is that Pennsylvania’s economic outlook is much improved from November, when we created our monthly revenue estimates that anticipated a much slower recovery from the impact of the COVID-19 pandemic,” Hassell said.

The state’s current fiscal year closes at the end of June. Speaking to the latest trends, Hassell said, “We are more than $1.3 billion above our estimate. This is very positive news with two months to go in the current fiscal year.”

While policy decisions could play into some of the statistics from one state to the next, the Pew researchers in their analysis said there are other factors at play.

“The fiscal fallout has played out different because of factors, including each state’s economic makeup, the share of jobs that can be performed remotely, the mix of taxes imposed, and differences in COVID-19 caseloads and public health restrictions,” they wrote in the report.

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