Vermont's September Revenue Figures Exceed Target for the Month

Vermont's September Revenue Figures - General Fund, Transportation Fund and Education Fund - Exceed Target for the Month
Montpelier, VT (October 10, 2008) - Secretary of Administration Neale F. Lunderville has released General Fund revenue results for the
month of September, the third month of Fiscal Year 2009. General Fund revenues totaled $127.44
million for September 2008, +$13.84 million or +12.19% above the $113.60 million consensus
revenue forecast for the month. Cumulatively, General Fund revenues year to date were $294.03
million or +12.97 million (+4.61%) above the consensus revenue forecast for Fiscal Year 2009.
However, there are certain factors that impact the availability of this apparent above target result.
It is important to note that the September revenue includes a legal settlement of $6.03 million. At the
time the consensus revenue forecast was approved in July 2008, the outcome of the legal action was
unknown. Consequently, no amount was included in the consensus forecast for the potential
settlement; however, an estimated $5.57 million was anticipated and already earmarked for use. Of
the $6.03 million, $2.3 million has been transferred to Teachers' Retirement and the remaining $3.73
million was included in the August 2008 General Fund Rescission, reducing the appropriation
reductions necessary to balance the FY 2009 budget. This means that only $0.46 million of the
settlement is in excess of what was anticipated, not the entire $6.03 million.
Without the portion of the settlement that was anticipated, General Fund revenue results for the
month of September were +$8.28 million or +7.29% above the $113.60 million consensus revenue
forecast for the month. Cumulatively, adjusted General Fund revenues year to date were +$7.40 million (+2.63%) above the consensus revenue forecast for Fiscal Year 2009. However, given
the instability in the national economy, we do not expect revenues to exceed targets for the
remainder of the fiscal year.
The monthly targets reflect the most recent Fiscal Year 2009 consensus revenue forecast that was
agreed to by the Emergency Board on July 29, 2008. The state's consensus revenue forecast is
normally updated two times per year in January and July. However, with the downturn in the
national economy, the Emergency Board has scheduled an interim review of the consensus revenue
forecast for November 18, 2008.
Personal Income Tax receipts are the largest single state revenue source, and are reported Net of
Personal Income Tax refunds. Personal Income Tax receipts for September were $67.33 million,
+$4.50 million or +7.16% above the monthly target. Corporate Income tax receipts for September
were $12.28 million, +$1.18 million or +10.65% above the target for the month. Both the Personal
Income Tax and Corporate Income Tax receipts were significantly above target in the category of
estimated income tax payments. For those individual and corporate tax payers required to pay
estimated tax payments in lieu of withholding tax, those payments are generally paid at a minimum
of 90% of their prior year tax amount. In light of national economic turbulence, it is very
probable that a significant portion of these estimated payments will need to be refunded when
the 2008 tax returns are filed. In other words, we do not believe that the elevated revenues seen
in September will continue in future months.
Sales & Use Tax and Rooms & Meals Tax were both above target for the month. Sales and Use Tax
was +$0.51 million (+2.95%) above the target for September of $17.30 million, while Rooms &
Meals was +$0.71 million (+6.00%) above the monthly target of $11.82 million. The remaining tax
component results for the month were: Insurance Premium, $2.14 million (+85.72%);
Inheritance/Estate Tax, $0.17 million (-88.00%); Real Property Transfer Tax $0.99 million
(+1.53%); and Other, $14.19 million (+103.58%). Included in the Other category was $6.03 million
in Bank Franchise tax - the settlement dollars referred to earlier in this press release. Year to date
results for these components were: Insurance Premium, $8.17 million (+2.97%); Inheritance/Estate
Tax, $1.82 million (-53.24%); Real Property Transfer Tax $3.06 million (+0.07%); and Other,
$27.68 million (+48.86%), inclusive of the $6.03 million settlement.
Transportation Fund
Secretary Lunderville also reported on the results for the non-dedicated Transportation Fund revenue.
Transportation Fund revenue was $19.07 million, which was +$0.22 million, or +1.18%, above the
monthly target for September. Cumulatively, Transportation Fund revenues year to date of $53.38
million were -$1.71 million or -3.11% below the consensus revenue forecast for Fiscal Year 2009.
For the month of September, Gasoline Tax revenue was slightly above target; actual revenues from
the Gasoline Tax were +$0.32 million (+5.66%) above the consensus revenue estimate of $5.65
million. The Other Fees of $1.87 was also above the target by +$0.38 (+25.20%). The Diesel Tax,
Motor Vehicle Purchase & Use Tax, and Motor Vehicle Fees were all below their monthly targets;
Diesel Tax, $1.28 million or -5.44% below the monthly target; Motor Vehicle Purchase & Use Tax,
$4.69 million or -5.67% below the monthly target; and Motor Vehicle Fees, $5.27 million or -2.20%
below the monthly target.
Education Fund
Secretary Lunderville released revenue results for the "the non-Property Tax" Education Fund
revenues (which constitute approximately 12% of the total Education Fund receipts). The Education
Fund receipts totaled $13.27 million for the month of September, or $0.18 million (+1.35%) above
the $13.09 million consensus revenue target for the month. Cumulatively, Education Fund revenues
year to date were $37.82 million or -$1.05 million (-2.70%) below the consensus revenue forecast for
Fiscal Year 2009.
The portion of the Education Fund derived from the Motor Vehicle Purchase & Use Tax was below
expectations for the month of September, as was the Lottery Transfer. The Education Fund portion
of the Sales & Use Tax was above target for September.
Specifically, the Education Fund components were: Sales and Use Tax, $8.90 million or +2.95%
above target; Motor Vehicle Purchase & Use, $2.35 million or -5.67% below target; Lottery
Transfer, $1.89 million or -2.16% below target; and Education Fund Interest $0.13 million or
+454.47% above the monthly target.
Conclusion
Secretary Lunderville cautioned that, "The continued volatility in the national economy is a serious
concern. We need to be very cautious because of the uncertainty of national markets and the
expectation that a significant amount of the Estimated Income Tax payments received to date in the
General Fund will likely need to be refunded. We will continue to monitor future revenues very
closely and review the situation again after the revenue forecast is revised in November."
Note: Revenue Estimates are fiscal year total estimates.
Prepared by Department of Finance & Management
Date: October 02, 2008