Secretary of Administration Jeb Spaulding released the Preliminary June 2011 General Fund Revenue results today. June marks the end of the fiscal year (FY) 2011. General Fund revenues totaled $112.82 million for June 2011, and were +$13.89 million or 14.04% above the $98.93 million consensus revenue forecast for the month. Preliminary FY 11 year end General Fund Revenues were $1,151.21 million or +$33.71 million or +3.02% ahead of target. Compared to the prior fiscal year, FY 2011 GF results are 10.9% ahead of FY 2010, but remain below the pre-recession FY 2008 results by -4.05%.
Secretary Spaulding commented, ‘We are certainly pleased that June was the fourth consecutive month where General Fund receipts finished ahead of official projections and that, for the year, General Fund revenues were approximately $112 million higher than for the previous year (FY 2010) - $60 million ahead of what was projected for FY 2011 last July. While these General Fund results are preliminary, we anticipate the final numbers will see only minor revision.’
Spaulding continued, ‘While these results are encouraging and seem to support a progressive improvement in our economy, I hasten to add there are indicators that a slowdown in the pace of recovery has now occurred. It will be interesting to see whether the State’s two economists recommend an upward revision to revenue projections for FY 2012 and beyond at the Emergency Board Meeting next week.’
Current targets reflect the Fiscal Year 2011 Consensus Revenue Forecast adopted by the Emergency Board at their January 14, 2011 meeting. Statutorily, the State is required to revise the Consensus Revenue Forecast two times per year, in January and July; the Emergency Board may schedule interim revisions if deemed necessary. The Consensus Revenue Forecast for FY 2012 is scheduled for review at the July 21, 2011 Emergency Board Meeting.
Personal Income Tax (PI) receipts are the largest single state revenue source, and are reported Net-of-Personal Income Tax refunds. Net Personal Income Tax is comprised of PI Withholding Tax, PI Estimated Payments, PI Refunds Paid, and PI Other. PI Withholdings less PI Refunds accounts for more than 60% of the annual net Personal Income Tax receipts. Preliminary net PI Receipts for June were recorded at $58.93 million, +$4.71 million or +8.69% ahead of the monthly target of $54.22 million. Preliminary year to date PI receipts were $553.27 million, or +3.55% above target.
Corporate Income Taxes for June are also reported net-of refunds. Preliminary June Corporate receipts of $16.21 million, $6.50 million or 66.98% above the monthly target of $9.71 million are recovering more than the prior month shortfall. Since most Corporate Taxes are paid on a quarterly basis, the largest months for Net Corporate Tax Receipts are September, December, March and to a lesser extent June. June was expected to be a good month for Net Corporate Tax receipts and the results did not disappoint. Preliminary year to date net Corporate Income Tax receipts of $89.66 million remained ahead of target of $80.60 million by +11.24%. Within net Corporate Tax receipts for the year, Corporate Estimates were +$12.15 million above target and Corporate Paid Returns were -$9.33 million below, partially offset each other, and resulting in +$2.82 million (combined) above target. In addition, lower than target corporate refunds (+3.77 million) and favorable results in the ‘Other’ Corporate (+$2.47 million) category (trusts, etc.) account for the remainder of the +$9.06 million above target result in Corporate Income Taxes for the year, overall.
The preliminary consumption taxes results for June were ahead of target: Sales & Use Tax receipts of $18.17 million exceeded the monthly target by +$1.46 million (+8.77%); Rooms & Meals Tax receipts of $8.92 million exceeded target by +$0.09 million (+0.97%). On a year to date basis, the consumption taxes slightly exceeded or essentially met their targets: Sales & Use Tax, $217.55 million (+0.94%); Meals & Room Tax, $122.82 million (+0.01%).
The remaining non-major tax components include Insurance, Inheritance & Estate Tax, Real Property Transfer Tax, and ‘Other’ (which includes: Bank Franchise Tax, Telephone Tax, Liquor Tax, Beverage Tax, Fees, and Other Taxes).
Preliminary Gross Estate Tax receipts for June increased the amount by which this category exceeds 125% of target. In accordance with statute (16 V.S.A. §2885 (a)(2)), Estate Tax receipts above 125% of target are transferred to the Higher Education Trust Fund (HETF) for scholarships to Vermont Students at Vermont institutions of Higher Education. Therefore, the monthly and year to date Estate Tax revenues shown in the chart below have been adjusted to comply with statute. The actual Gross year to date Estate Tax receipts of $35.88 million are shown in the attached General Fund Schedule 2, albeit only $21 million is shown as available to the General Fund in the table below, based on 16 V.S.A. §2885 (a)(2).
Secretary Spaulding elaborated on his statement from last month, ‘As part of an overall effort to rebuild reserve funds to address potential severe federal reductions in FY 2012, the Governor and Legislature have provided that this year only the first $11 million over the 125% threshold will be transferred to the Higher Education Trust Fund and the remainder will be added to a revenue shortfall reserve. Since the amount in excess of 125% was $14.88 million, $11.00 million of which has been transferred to the Trust Fund, the remaining $3.88 million has been transferred to the revenue shortfall reserve to act as a buffer against the likely federal cutbacks being discussed in Washington, D.C.’
The preliminary results for the remaining non-major categories for June were as follows: Insurance Tax, $1.50 million (+8.06%); Property Transfer Tax, $0.93 million (+25.03%); and ‘Other’, $8.15 million (+11.31%). Preliminary year to date results for these categories were: Insurance Tax, $54.99 million (+1.09%); Property Transfer Tax, $8.37 million (+7.19%); and ‘Other’, $81.25 million (+0.24%).
The preliminary non-dedicated Transportation Fund Revenue for June was also reported on by Secretary Spaulding. Total preliminary non-dedicated Transportation Fund receipts of $24.33 million for the month fell slightly below target by -$0.62 million (-2.48%), against the monthly target of $24.95 million. However, the preliminary year to date non-dedicated Transportation revenue of $217.62 million essentially met the target of $217.83 million (-$0.22 million, -0.10%).
Individual preliminary Transportation Fund revenue receipts components for June were mixed: Gasoline Tax, $4.95 million or -8.68% behind target; Diesel Tax, $1.71 million or -13.66% below target; Motor Vehicle Purchase & Use Tax, $6.96 million or +$8.42% above target; Motor Vehicle Fees, $8.68 million or -2.29% below target; and Other Fees, $2.02 million or -9.64% short of the monthly target. The preliminary June year to date Transportation Fund revenue results were: Gasoline Tax, $60.64 million or -1.24% short of target, Diesel Tax, $15.40 million or -0.01% below target; Motor Vehicle Purchase & Use Tax, $51.37 million or +2.87% ahead of target; Motor Vehicle Fees, $72.32 million or -1.06% behind target; and Other Fees, $17.89 million or -0.62% below target.
Secretary Spaulding said, ‘The Transportation Fund, overall, was essentially on target, missing by less than one-tenth of one percent. Despite the erratic and unstable energy prices, the Transportation Fund held its own for FY 2011. However, if high fuel prices persist, it would not be surprising to see some dampening of revenue projections for the next year.’
As with the General Fund, only minor changes can be expected from the preliminary results to the final Transportation Fund results for the year.
The Secretary also reported on the results for the preliminary Transportation Infrastructure Bond Fund (’TIB’). Preliminary TIB Fund Gas receipts for June were $1.58 million or +3.81% in excess of target; preliminary year to date receipts of $16.51 million were +0.06% ahead of target. Preliminary TIB Fund Diesel receipts were $0.32 million or +26.47% above the monthly target; preliminary year to date TIB Diesel receipts were $1.96 million or +3.39% above target. TIB Fund receipts are noted below the following table:
The preliminary ‘non-Property Tax’ Education Fund revenues (which constitute approximately 11.9% of the total Education Fund sources) were released today by Secretary Spaulding. The preliminary non-Property Tax Education Fund receipts for June totaled $14.17 million, or +0.07 million (+0.52%) above the $14.10 million target for the month. Preliminary year to date Education Fund revenues were $154.40 million or 0.37% ahead of the year to date target of $153.83 million.
The Secretary said that, ‘The preliminary Education Fund revenue was essentially on target for the year. Although we do not anticipate any dramatic changes to these preliminary results, we are awaiting finalization of the Lottery transfer results which could impact the final result somewhat.’ The preliminary individual Education Fund revenue component results for June were: Sales & Use Tax, $9.09 million, or +8.77% above target; Motor Vehicle Purchase & Use Tax, $3.48 million or +8.42%; Lottery Transfer, $1.60 million or -36.03%; and Education Fund Interest, a loss under $0.01 million against a target of under $0.02 million (-122.55%). Preliminary year to date results were: Sales & Use Tax, $108.77 million (+0.93%); Motor Vehicle Purchase & Use Tax, $25.68 million (+2.87%); Lottery Transfer, $19.90 million (-5.23%); and Education Fund Interest, $0.04 million against a target of $0.10 million (-56.06%).
Secretary Spaulding concluded, ‘We all should be pleased by the FY 2011 revenue results. Vermont’s economy seems to be on the mend and I hope global and national events don’t stall our recovery. We should also be pleased that the Governor and Legislature took the prudent course by making provisions that unexpected revenues would be saved to buffer federal budget cuts and any unexpected case load increases.’
Of the approximately $33.71 million excess above target, after the amount needed to maintain the General Fund Budget Stabilization reserve at its statutory 5%, the first $10.69 million has already been designated by the Legislature: $3.6 million to offset some of the deficit in the Unemployment Insurance Fund, and the remaining $7.0 million to be held to offset potential federal funding cuts. This last $7.0 million is in addition to the $3.88 million reserved for the same purpose from Estate Tax receipts explained on page 2 above. Additionally, any General Fund remaining, after all these obligations are met, has been designated by the Legislature to be deposited into the human service caseload reserve fund until appropriated by act of the general assembly.