by Timothy McQuiston Vermont Business Magazine Administration Secretary Susanne Young is cautiously optimistic that tax revenues will stay ahead of expectations. The caution comes from uncertainty from both technological and federal policy changes. General Fund revenues collected for the month of February totaled $106.46 million, -$0.80 million below the consensus cash flow expectation of $107.26 million for the month. The Transportation Fund collected $18.44 million for the month of February, +$0.52 million ahead of its $17.91 million target. The Education Fund collected $15.12 million for the month, $1.13 million ahead of the consensus target of $13.99 million.
While the Rooms & Meals tax missed its expected target and Sales exceeded its target, expectations for both have shifted in recent years. Rooms & Meals expectations have expanded as it has grown along with strong tourism seasons, while Sales has decreased as online sales have increased at the expense of local retailers. Both those trends are expected to continue.
The updated forecast expected revenues for Fiscal Year 2018 to increase in the General Fund by $8.1 million (.5%), by $1.4 million (.5%) in the Transportation Fund, and by $0.4 million in the Education Fund.
Compared to this point in time last Fiscal Year 2017, the General Fund revenues have increased by $20.47 million ($975.41 million vs. $954.95 million).
The Transportation and Education Funds are both slightly ahead of last fiscal year by +$6.40 million and +$6.84 million, respectively.
February marks the eight month of fiscal year 2018. On January 18, 2018, the Emergency Board met and approved a revised consensus revenue forecast as recommended by the State and Legislative economists. The updated consensus forecast, with new monthly and cumulative targets, will be used to evaluate the receipts versus targets through June 2018.
“The three funds were generally on target for February,” said Secretary Young. “The Personal Income tax component of the General Fund, however, was -$8.6 million below target, primarily due to technology and other improvements at the Vermont Tax Department to the processing of Personal Income tax refunds. Refunds this year are being paid more quickly than the consensus forecast anticipated. At the end of February, 2017, the Tax Department had issued 18,521 tax refunds. At month’s end in February, 2018, 22,000 more refunds were issued than last year, for a total of 40,526. This is good news for those owed a refund as well as for Vermont’s economy as earlier refunds help Vermont households pay off debt sooner and boost consumer spending.”
This -$8.6 miss in personal income was offset almost entirely by a better than expected performance in the Corporate Tax of +$3.67 million, Insurance Tax of +$3.75 million and the Sales and Use Tax at +0.83 million.
“Corporate Income Tax revenues remain uncertain—primarily due to federal tax reform and the pending extra ordinary corporate tax refunds that we have discussed over the past several months,” noted Young. “March and April revenue results should bring more clarity to how federal tax changes will
impact Vermont’s corporate collections when first quarter estimates are filed in mid-March for calendar year corporations and requests for refunds are filed in mid-April.”
The positive variance in Insurance Tax receipts appears to be attributable to the Captive Insurance Tax component which finished February more than $3.5 million higher than expected. “It remains to be seen whether or not this positive variance will be given back in the month of March,” continued
the Secretary.
Source: Administration 3.15.2018