Budget fallout from coronavirus hitting Pennsylvania, Philadelphia

PHILADELPHIA - The economic hurt from measures to contain the coronavirus unfolded more Friday, as Pennsylvania state government’s tax collections collapsed in April and, in Philadelphia, Mayor Jim Kenney proposed tax increases and layoffs.

The state Revenue Department reported collecting $2.2 billion in April, half of what it had originally expected in one of the biggest revenue months before the coronavirus pandemic hit.

The department estimated that approximately $1.7 billion of the $2.2 billion shortfall in April can be attributed to moving tax-filing deadlines to July or later.

RELATED: Mayor Kenney's new budget includes tax raises, layoffs, pool closings

Most of that gap — about $400 million of the roughly $500 million difference — is thus far being attributed by department analysts to the business shutdowns to fight the spread of the virus.

Still, the losses from the shutdowns can be expected to widen in May and beyond, Revenue Secretary Dan Hassell said.

“This is by no means over, even once we get to the point where businesses are all reopening in the coming weeks, there’s still a lot of economic damage that’s been done and it will take some time for those effects to clear,” Hassell said in a telephone interview.

Philadelphia Mayor Jim Kenney (City of Philadelphia)

Gov. Tom Wolf has warned that his office is projecting a budget deficit of up to $5 billion for the 2019-20 fiscal year ending June 30, although perhaps $2 billion of that will show up in July and August because of the changed tax-filing deadlines.

Because of that delay, lawmakers are considering passing a temporary placeholder budget in the next two months and then reassessing the state’s fiscal situation after the Nov. 3 election, or even later.

Meanwhile, Wolf’s administration has clamped down on hiring, sought concessions in vendor contracts and frozen nearly $1 billion in authorized spending, including cash meant for arts grants, skills training programs, major purchases and environmental improvement projects.

Wolf has said he is counting on billions in federal aid to help fill other gaps. The state has about $4 billion in coronavirus-related aid it can use to cover costs associated with the pandemic, although counties that missed the population threshold to receive federal aid have asked for a share.

Wolf in February proposed a $36 billion budget for the new fiscal year, although the revenue hit from the shutdowns could force considerable cutbacks. Including nearly $600 million in supplemental cash for the current fiscal year, Wolf asked for another $2.6 billion in new spending, or 7.6% more.

In Philadelphia, the nation’s sixth-most populous city, Kenney said the pandemic had inflicted $650 million in costs and projected revenue losses onto the city through next summer.

To attack it, Kenney floated increases in property taxes, parking taxes and in non-resident wage taxes, and slashed his original budget proposal from $5.2 billion to under $4.9 billion.

He is also calling for potentially hundreds of layoffs, keeping public pools closed and delaying street-sweeping and pre-kindergarten education initiatives.

“There is not a single person, including myself, who likes this proposal,” Kenney said Friday.

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