Economists see some hope in state’s economic future

As the new administration takes office, Governor Shumlin and his team of economic advisers are dealing with upwards of a $150 million budget deficit. Twice a year, a panel known as the Emergency Board, comprised of the governor and key lawmakers, is notified about the state’s tax revenue projections. In recent years, Vermont tax collections and state finances have been affected by a troubled economy, but economists say there may be signs of improvement.
Both Jeff Carr, for the administration, and Tom Kavet, for the Legisalture, said last Thursday that modest gains can be seen in economic indicators, including in tax receipts. However, these gains will have only a slight positive effect on the state’s deficit in the near future.
Meanwhile, Vermont Economy Newsletter held its annual meeting Friday. Economist Richard Heaps held a similar view, saying that a slow recovery was occurring in Vermont. He said he could envision little gain in the troubled construction and real estate industries, but that business services should see growth. He added that the unemployment rate would likely continue to lower as the jobs picture improved.
Vermont has the fifth lowest unemployment rate in the country, but more than 14,000 jobs have been lost in the state since 2007.
According to state economists, the performance of state revenue streams over the next six months will help them better predict where the economy is heading.
Based on the possibility of a stronger economic future, Carr and Kavet recommended small increases in the net General Fund revenues anticipated during the next eighteen months. Shumlin and the heads of the Legislature’s four money committees adopted the economists’ recommendations for this fund and for revenues for the Transportation and Education Funds.