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Pennsylvania&#8217;s economy is showing signs of an upswing, but tax revenues are likely to lag in future years, keeping pressure on the state budget, Mark Ryan, deputy director of the state Independent Fiscal Office, said Wednesday at an information session sponsored by the Pennsylvania Economy League.The nonpartisan office was created in 2010 to analyze economic and budgetary issues for the Legislature and to provide revenue projections for use in the budget process.State revenues in the fiscal year that ends June 30 will be nearly $600 million higher than anticipated, Ryan said, largely due to higher corporate income tax receipts and a boost in unclaimed property.Ryan said the reasons for the higher corporate payments are unclear, and the trend is unlikely to continue. The unclaimed property revenue is due to a change made last year that shortened the time banks and other institutions could hold dormant accounts to three years from five.&#8220;That results in a flood of money coming in,&#8221; he said, noting that some of it will eventually be returned to its owners.Combined with steady growth in receipts from the sales tax and personal income tax, &#8220;at least for the short term, things are looking a little bit better,&#8221; Ryan said.But even one year from now, the office forecasts only 0.6 percent growth in general fund revenue, despite a predicted economic growth rate three times that. The reason, Ryan said, is largely demographics, as the number of Pennsylvanians age 65 and over grows much faster than the working-age &#8211; and taxpaying &#8211; population.It&#8217;s not a new trend. A chart in Ryan&#8217;s presentation showed Pennsylvania&#8217;s gross domestic product rose 82 percent in the past 16 years, while sales tax revenues grew by 50 percent, corporate tax payments grew 63 percent and personal income tax revenues increased 71 percent.&#8220;Unless economic growth were to take a steep and permanent turn for the better,&#8221; it&#8217;s not possible to grow out of budget challenges, Ryan said.Rather, as an aging population uses more government services but pays lower taxes, the stress on Pennsylvania&#8217;s coffers may grow rather than lessen, unless a way is found to better balance revenues and spending.

Fiscal watchdog tells Wilkes-Barre audience state budget challenges will be norm