Dear  

On May 1, the state's Independent Fiscal Office (IFO) released initial revenue projections for FY 2014-2015, as required by statute. For FY 2014-2015, revenues are projected to be $29.5 billion, a 3.5 percent increase, based on improved economic growth, including a stronger labor market and acceleration in consumer spending.

The IFO also released revised FY 2013-2014 revenue estimates, coming in $608 million lower than projections they issued at the beginning of the fiscal year. The IFO noted that some of the events that contributed to the FY 2013-2014 shortfall are one-time occurrences, and their 2014-2015 forecast therefore assumes a return to more normal revenue patterns. Relative to the Executive Budget presented by Gov. Corbett in February, the IFO projections are $569 million lower for FY 2013-2014 and $778 million lower for FY 2014-2015, for a two-year difference of $1.35 billion. However, these amounts exclude proposed legislative initiatives, cost savings, and new revenue from natural gas leases and other sources.

As reported in the May 2 Bulletin, a continuing and significant trend of state revenues falling short of projections is adding to an already tight state budget outlook for FY 2014-2015. In early May, the Department of Revenue reported it had collected $328.3 million less than anticipated in General Fund revenue in April, bringing fiscal-year-to-date collections $424.5 million below estimate. Revenue Secretary Dan Meuser indicated much of the April shortfall is attributed to personal income tax collections being well below estimate, which stems from larger than anticipated impacts of federal tax increases which took effect on Jan. 1, 2013.

Media reports indicate that Gov. Corbett may revise his budget numbers - as much as $800 million below his February proposal - while potentially asking the General Assembly to find another $400 million in reductions, although no new proposals have yet been made public.

The House Local Government Committee on May 7 unanimously reported HB 2131, legislation which would correct an error in the Consolidated County Assessment Law (CCAL). In January 2014, the Commonwealth Court issued an opinion in the case of Pedersen v. Monroe County Board of Assessment Appeals, affirming that a shed could not be taxable under the plain language of the CCAL because it was not a "building permanently attached to the land or connected with water, gas, electric or sewage facilities" as outlined under section 8811(a). The case brought to light an inadvertent drafting error caused by the merger of language from the prior assessment statutes, which was simply meant to be a reduction of the multiple laws into a single statute; any changes in language were designed to provide uniformity among the various previous statutes. A review of the legislative history indicates that the movement of language highlighted in the Pedersen case was an editorial decision, rather than an intent to change the interpretation of the statute.