Virus Outbreak Pennsylvania

People wait for a takeout order May 15, 2020, at a restaurant along Butler Street in Pittsburgh's Lawrenceville neighborhood.

(The Center Square) – Pennsylvania’s Independent Fiscal Office shared some insights into the state’s economy this week, noting that local governments may be missing out on $833 million to $3.4 billion in tax revenue as a result of the pandemic shutdowns.

Citing an analysis by the University of Pittsburgh, the IFO reported that the best-case scenario showed a 4 percent drop in revenue for the 2019-20 fiscal year, and the worst-case was a 16 percent drop.

Anywhere from the 3 to 8 percent of municipalities are at risk of running out of money to fund operations, the IFO warned.

“The medium impact scenario projects that between FY 2019-20 and FY 2020-21 an estimated 150 municipalities will face cash insolvency and may not have sufficient revenues to continue operations,” the IFO report said.

The biggest cause of the drop is an expected $526 million decline in earned income tax, the IFO said. It also expects a 25 percent dip in amusement tax collections and 20 percent cuts to parking revenue and business tax numbers.

On a more positive note, the IFO cited national and state trends in sales tax numbers that suggest consumer purchasing is already rebounding. The agency noted that May’s national sales tax numbers, compared to April, reflected the biggest month-to-month jump in U.S. history, though still far below the levels seen in May 2019.

“Similarly, Pennsylvania consumer spending for the first day in May (-17.5%) and June (-5.4%) is lower than the same day of the prior year,” the IFO wrote. “While consumer spending remains below prior year levels, recent patterns suggest a V-shaped recovery in the near term.”

Regional Editor

Dave Lemery is a veteran journalist with more than 20 years of experience. He was the editor of Suburban Life Media when its flagship newspaper was named best weekly in Illinois, and he has worked at papers in South Carolina, Indiana, Idaho and New York.