Senate Appropriations Committee Report
(all tables and
graphics can be viewed online)
**Earlier this week, the Fitch rating agency affirmed
the Commonwealth's debt rating at AA– but assigned a Negative Outlook due to the
use of non-recurring budget balancing items in recent years, a lack of reserves,
continued cost pressures and modest revenue growth.
Change Coming Soon for Online Retailers
With the holiday shopping season in full swing, now is a
good time to highlight a change included in Act 43 of 2017 that will help level
the playing field for Pennsylvania’s brick-and-mortar retailers. For decades,
Federal Commerce Clause court decisions generally have prohibited states from
requiring sellers to collect and remit their sales tax unless the seller has a
bright line nexus, or connection, with a state. The requisite connection
establishing nexus is often in the form of a brick-and-mortar physical
presence. In the age of Internet shopping, many states, including Pennsylvania,
are looking for ways to collect sales and use tax due on these purchases while
not running afoul of the Federal prohibitions.
For transactions occurring on or after April 1, 2018,
online marketplace facilitators, sellers and referrers having aggregate sales
into Pennsylvania of at least $10,000 in the previous calendar year must elect
to either collect and remit sales tax or comply with notice and reporting
requirements. Notice and reporting requirements include the following:
- Posting notice on its platform informing purchasers
having a delivery location in PA that sales tax may be due on the purchase
and that PA requires the purchaser to file a use tax return.
- Providing a written notice to each purchaser at the
time of sale stating that sales tax is not being collected and the purchaser
may be required to remit use tax to PA.
- Providing instructions for obtaining information from
the Department of Revenue on how to remit use tax.
- Prominently displaying this information on each
invoice, order form, sales receipt or similar document.
- Filling a report with the department no later than
February 28 of each year providing the names of Purchasers, including
mailing address, address to which the product was delivered, aggregate
dollar amount of purchases, name and address of the remote seller,
marketplace facilitator or market place seller.
Act 43 also includes substantial fines and penalties for
failure to comply with the notice and reporting requirements. These changes are
expected to generate increased sales and use tax revenues of $8.2 million in
fiscal year 2017-18 and $50.5 million in fiscal year 2018-19, when the
provisions are effective for a full year.
Commonwealth Financing Authority Approves $1.5 Billion Securitization
On November 14, the Commonwealth Financing Authority
unanimously approved a resolution to securitize $1.5 billion of tobacco
settlement fund revenues. Included as part of the FY 2017-18 budget, this
revenue will be used to offset last year’s deficit, which was approximately the
same amount. The Commonwealth should receive the revenue in 60 to 90 days.
Economic Indicators: December 2017
With Thanksgiving behind us and Christmas just weeks away,
many of us do plenty of traveling to visit family, friends and loved ones. AAA
estimated that Thanksgiving 2017 would be the most heavily trafficked holiday
since 2005, estimating that nearly 46 million Americans would be traveling more
than 50 miles from their home via car. This increase in travel coupled with
strong fall consumer demand, and a market that continues to recover after a
hurricane season that hit our Nation’s refining industry hard, has caused
gasoline prices to be the most expensive since 2014. The good news is prices
are expected to decline through the month of December and into early 2018.
With the holiday season, so too comes the colder weather.
The U.S. Energy Information Administration is forecasting an increase in
expenditures for home heating this winter compared to last. Mild winter weather
over the past two years has resulted in a reduction of consumption across all
heating utilities. A forecast for a return to average winter weather, causing
an increase in consumption, is the driving factor in the expenditure increase
over last year. Both electric and natural gas are expected to experience modest
price increases. An increase in the price of crude could cause residential
customers to see an increase of $0.25 - $0.30 per gallon compared to last year.
The chart below shows the reduced consumption of heating alternatives over the
past two winters due to more mild weather.
Official Revenue Estimate Certified in November
General Fund revenue collections for the month ended
November 2017 totaled $2.3 billion, which was $26.7 million, or 1.2%, above
estimate. Fiscal year-to-date collections total $11.4 billion, which is $26.1
million, or 0.2%, above estimate. The 2017-18 Official General Fund Revenue
Estimate was certified in November at $34.7 billion. The monthly distribution of
the Official Estimate is now available. Prior to November, revenue collections
were being compared against the Independent Fiscal Office’s revenue estimate,
which was prepared in June.
Total General Fund revenue for November 2017 was $318.6
million, or 16%, more than General Fund revenue collected in November 2016.
However, November 2016 revenues did not include a $100 million transfer of
Liquor Store Profits, which did occur this November. Also, last year’s
statutory change made to corporate net income tax (CNI) filing dates took effect
this year and resulted in approximately $60 million of additional CNI tax
collections this November compared to last. Last year, these collections were
due in the month of October. After adjusting for these differences, November
2017 revenues are still approximately $159 million, or 8%, more than November 2016.
For the fiscal year-to-date, total General Fund revenue is
$577.8 million, or 5.3%, higher than FY 2016-17. Total tax revenue growth for
FY 2017-18 is 4.3% higher than it was through November of FY 2016-17. The lower
tax revenue growth of 4.3% as compared to total growth of 5.3% is mostly a
result of the mismatched timing of the $100 million Liquor Store Profit transfer.
Motor License Fund collections were $24.3 million, or
10.2%, above estimate for the month of November. The Motor License Fund is $24
million, or 1.9%, above estimate for the year. Motor License Fund revenues are
15.4% more than last year through November.
Contact Senator Browne:
On the Web:
702 W. Hamilton Street
Allentown, PA 18101
9 AM to 5 PM
9 AM to 4 PM
281 Main Capitol
Harrisburg, PA 17120
9 AM to 4:30 PM
Western Lehigh County
Upper Macungie Township Building
8330 Schantz Road
Breinigsville, PA 18031
By Appointment Only
Northern Lehigh County
North Whitehall Township Building
3256 Levans Road
Coplay, PA 18037
By Appointment Only