Apr. 12, 2023

Acting Secretary Pat Browne, along with Drew Svitko, Executive Director of PA Lottery, John Kaschak, Executive Deputy Secretary, Amy Gill, Deputy Secretary for Tax Policy, and Christin Heidingsfelder, Deputy Secretary for Administration, testified before the House Appropriations Committee. House Republicans focused the majority of our questions on the operations of the DOR and the Pennsylvania Lottery, revenue collections and estimates for the current and upcoming fiscal years, and the various tax changes proposed by Governor Shapiro.

Key Takeaways

House Republicans are pleased to see revenues have exceeded projections to date for the current fiscal year.  It is important to note, however, that even though collections are strong, there are economic indicators warning of a pending slowdown.  It would be prudent at this time to save, not increase spending.  
While the DOR’s outyear projected revenues are indeed more conservative than those of the Independent Fiscal Office (IFO), so too are the outyear projected expenditures.  The Administration’s expenditure growth projection, an average of 1.8% annually, is significantly smaller than the 3.3% projection of the IFO, representing a potential difference of nearly $5 billion by FY 2027-28. 
The DOR testified that the elimination of the Sales and Use Tax and Gross Receipts Tax on Mobile Telecommunication Services will save taxpayers an estimated $62 million in FY 2023-24, with the largest savings in any one fiscal being $89.6 million.  Yet, Governor Shapiro has stated publicly, and House Democrats continue to cite, that this will save taxpayers $124 million a year.  
As noted in the hearing with the Department of Aging, and confirmed by the DOR, the Property Tax and Rent Rebate Program (PTRR) proposal: 
o Won’t take full effect until FY 2024-25, meaning seniors will see less money in the upcoming budget year after the temporary 70% increase in the current fiscal year. This could lead to confusion for claimants who have already begun filing for rebates to be issued in July 2023, as the proposed increase would only be realized with rebates issued after July 1, 2024.  
o Would require the transfer of funds from the Property Tax Relief Fund to the Lottery Fund in order to provide the funding needed to pay the increased rebates, thereby reducing property tax relief already received by homeowners.
For countless years, the DOR has spent far too much money on the myPATH system technology and modernization project.  While the DOR submitted a request for $6.3 million to the Office of the Budget in October, Governor Shapiro has proposed $22.1 million in funding – a $17 million increase over the prior year. Before more money is allocated for this IT upgrade, a realistic plan must be presented. 

Notable Q&A

Rep. Torren Ecker questions the department on IT modernization. 

Rep. Eric Nelson asks the department about revenue and spending projections for the current budget. 

Watch Full Hearing