Pennsylvania revenue estimate revised $1.5 billion upward
The Independent Fiscal Office (IFO) provided a midyear update to its financial projections on Tuesday, adding $1.5 billion to the state’s anticipated tax revenue.
The office revised the initial estimate for fiscal year 2022-23 upward from $42.2 billion to $43.7 billion, thanks to growth from the corporate net income tax, non-motor sales tax, and the personal income tax.
The economic outlook for the next few years, however, is weaker, with less growth than the American economy saw as it recovered from the pandemic.
“For 2023, what we find is there is a general consensus for weakened growth for the U.S.,” IFO Director Matthew Knittel said during a presentation of the report.
Pennsylvania’s trend was similar, with the IFO expecting real GDP growth of 0.5% in 2023 and 1.2% in 2024. Other economic forecasters were more optimistic, with IHS Markit expecting 0.9% in 2023 and 1.9% in 2024.
Job growth, too, is expected to continue through 2024.
“We think there’s still more room to expand,” Knittel said.
Payroll employment hit 99.1% of what it was pre-COVID, he added. Pennsylvania’s recovery, however, still lags behind its pre-pandemic employment numbers in some significant areas.
Nursing jobs are still 87.8% of their pre-pandemic numbers, and college/university jobs are also lagging at 91%. Other areas, such as warehousing and storage, package delivery services, and management remain above their pre-pandemic numbers.
However, big wage gains are “largely done,” the report noted.
The IFO speculated that, with a strong labor market cooling off, the average workweek will decline. As a result, workers will take more part-time jobs than full-time jobs, and employers will offer fewer hiring bonuses and overtime opportunities.