by Timothy McQuiston Vermont Business Magazine Personal Income tax revenues tanked in April, which led to total tax revenues falling more than $14 million below targets for the fiscal year, which ends June 30. Personal Income is the single most important revenue source for the State of Vermont. Consumption taxes also were down, but only slightly. A strong performance by the Corporate Tax was far too small to offset the plunge in PI. The state has two more months before the end of the fiscal year to recoup the losses or the state budget would have to be adjusted to achieve balance.
Overall, General Fund (GF) revenues for the month of April were down by -$16.44 million or –7.18%, totaling $212.54 million versus a monthly target of $228.98 million. This shortfall is driven by the under-performance in Personal Income by $18.02 million. This may be partly explained by compliance issues related to tax changes passed by the 2015 General Assembly. The Tax Department is looking into this issue. Sales and Use and Meals and Rooms were off target by -$0.94 million and -$0.87 million respectively. They were offset with an up in Corporate Tax +$2.51 million (+20.10%). The General Fund finishes April with a cumulative year to date shortfall of -$14.65 million, $1,208.4 million versus a target of $1,223.1 million. Compared to prior fiscal year, (FY2015), the current cumulative results for GF are +$22.46 million, or 1.89% ahead.
However, a windfall in April 2015 led to a small surplus last year. The 2015 "April surprise" was from a surge in bonuses and dividends, not just from regular wages. It's not entirely clear if total income is down drastically or whether reporting changes and the state's cautious approach to refunds, as part of its effort to curb fraud, is largely to blame.
April is the tenth month of FY 2016. The fiscal year revenue targets were adopted by the Vermont Emergency Board on January 19, 2016.
The Transportation Fund (TF) had non-dedicated receipts for April totaling $23.07 million, barely missing the monthly target by -$0.23 million (-0.99%), resulting in cumulative year to date receipts of $213.45 million. Compared to the prior fiscal year (FY 2015), the current cumulative results for TF are +$3.99 million, or +1.90% ahead.
The Education Fund (EF) receipts for April were off target by -$1.21 million. Sales and Use was down -$0.50 million, MV Purchase and Use down -$0.44 million and Lottery revenues down at -$0.29 million. Compared to prior fiscal year (FY2015), the current cumulative results for the EF are +$5.48 million, or +3.64%.
Secretary Johnson said, “While below forecast, the General Fund revenues are almost 2% over last fiscal year. We continue to assess the underlying causes for the under performance in the Personal Income—Paid Returns, we will be closely monitoring the last two months of the year and carefully evaluating the final two month’s expenditures to assure that we finish this year with a balanced General Fund that will not require the use of our reserve funds. It is too early to know if this will have any impact on FY 2017 – that question will be addressed with the release of the July revenue estimates.”
