PA's Independent Fiscal Office on the economy

Wednesday, 01 February 2012 15:28

PA's Independent Fiscal Office on the economy

Written by Scott LaMar, Director of Radio Smart Talk

Radio Smart Talk for Thursday, February 2:

Here's the good news -- credit balances have stopped declining and appear to be increasing slowly, banks are lending again, corporations are making profits and consumers are showing signs of gaining confidence in the economy. All this is contained in a report released two weeks ago by Pennsylvania's new Independent Fiscal Office, which concluded there is room for guarded optimism.

However, the IFO's report had plenty to be conerned with too. In the short term, Pennsylvania's Corporate Net Income Tax and Personal Income Tax collections are coming in lower than anticipated. The Corbett Administration is estimating a budget shortfall of about $500 million when the fiscal year ends June 30. In addition, the state's aging population does not bode well for Personal Income Tax revenue in the future.

Sales and Use Tax collections appear to be doing OK, according to the IFO.

We'll meet IFO Director Matthew Knittel on Thursday's Radio Smart Talk to discuss the nation and the state's economy and what it means to state government and Pennsylvanians.

Read the IFO report.

LISTEN TO PROGRAM:

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# Brian 2012-02-02 10:29

Good Morning Scott,

In regards to the PA economy, how important is it for our public school system to improve over the next few decades in order for our state economy to grow? What advances in higher education do you think will improve the PA economy?

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# chris 2012-02-02 15:40

Today's program was a disservice to listeners. 1st, the IFO analysis appears to lack a dynamic component, relying instead on static comparisons. For example, as a larger share of PA's population is of retirement age, and hence exempt from income tax, might there be an increase in property tax revenue; might money individuals save on income taxes lead to purchases of more expensive real estate, thereby driving up property tax revenue? 2nd, there was much discussion of the increased costs associated with an aging population, but no discussion (that I heard) of potential savings: Social service costs for the elderly/retired may go up, but education costs may decline as the child-age population falls (as a share of the whole). Discussion of possible elder care costs & lost tax revenue led the host to express a lack of optimism. This lack of optimism, which need not have occured had there been a more/balanced discussion, crossed the line from reporting/journalism into editorializing.

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