By Victor Skinner | The Center Square contributor
(The Center Square) – Pennsylvania senators questioned officials from the Department of Revenue on Tuesday on numerous topics in the Appropriations Committee, from projections in Gov. Tom Wolf’s proposed budget to lottery sales, staffing and other budget issues.
Several Republicans focused on roughly $5 billion more in projected revenues from the department than the Independent Fiscal Office and pressed officials on why the governor’s proposed budget doesn’t match up.
Revenue Secretary Daniel Hassell told the committee “the IFO outlook seems to be considerably more pessimistic” in regards to sales tax collections, while “what we have in our forecast is basically a continued slowdown.”
Appropriations Committee Chair Pat Browne, R-Lehigh, also questioned officials on economic factors that could influence the revenue projections, but Hassell was not sure how the threat of war in Ukraine, inflation or other variables could factor in.
“It’s very difficult to know,” he said. “Over the next few months, we will continue to look at revenue as it comes in.”
Sen. David Argall, R-Berks, noted the $13 billion difference between IFO and Revenue Department projections in five years could require a 2.45% income tax increase, or a doubling of the state’s 6% sales tax, to make up the difference.
Revenue officials discussed the department’s shift to teleworking and said about 44% remain at home full time, about 29% work from home part time and about 20% are back full time in the office. The department saved about $447,000 from closing offices during the pandemic, they said.
Several senators questioned the security and confidentiality of working from home, and department officials clarified that employees are not allowed to use personal computers or to print documents to avoid issues.
Republicans also inquired about the governor’s proposal to use federal stimulus money to double the commonwealth’s property tax and rent rebate program for seniors, and the department’s intent to simply double the payouts for those eligible.
Sen. Scott Hutchinson, R-Oil City, expressed concerns.
“That blurs in their mind it’s a one-time thing,” he said.
Hassell agreed it may be necessary to include a notice to seniors when the rebates are processed, if the plan is approved. Democrats pointed out the program is funded through lottery sales, and the one-time boost would come from federal stimulus money under the governor’s proposed budget.
Several senators discussed the department’s struggles with response times and returned calls and questioned how officials are working to resolve the issues. Hassell contended department officials use a variety of metrics to track efficiencies, while other officials noted call center workers are processing 31% more calls with fewer staff than in years prior.
“It took a matter of months for the department to get back up and running again” following a shutdown during the pandemic, Hassell said. “I think that’s largely behind us at this point.
“Our biggest challenge right now is filling jobs,” he said.
Department officials also answered numerous questions on revenues from various lottery sources and how skill game machines in many venues are negatively impacting scratch-off sales.
Democrats in the hearing focused on how the long-term benefits of the Wolf budget’s investments in education, infrastructure and law enforcement could ultimately boost tax revenues.
Committee Minority Chair Sen. Vincent Hughes, D-Philadelphia, also noted billions of dollars in infrastructure investments coming to Pennsylvania from the federal infrastructure law approved by Congress and questioned Hassell on “what that means for the bottom line.”
Hassell deferred to the Pennsylvania Department of Transportation on specific economic impacts but said, “I think you’re absolutely right that kind of investment pays dividends in the short term and the long term.”
“It’s got to be a benefit. It’s got to grow the economy,” Hughes said, adding, “I think that’s a worthwhile study.”
Hughes suggested the investment benefits would “be a high buffer” to counterbalance issues with the state’s aging workforce.