by Timothy McQuiston, Vermont Business Magazine Vermont General Fund revenues bounced back in March, notably for the vital personal income tax, but uncertainty continues as to how refunds ultimately will play out in April through June, which will mark the end of the fiscal year. Complaints from taxpayers on problematic under-withholding on the federal tax tables, and changes in recent years on the state side, has led to uncertainty as to how much the state will ultimately take in. As of now, the state is showing slightly positive results for FY2019. The personal income tax alone gained nearly 23 percent in March, to just over $30 million.
General Fund tax revenues collected for the month totaled $89.30 million, or $8.42 million above the monthly consensus revenue target. Year-to-date, fiscal year 2019 General Fund revenues are $5.37 million, or 0.60%, above expectations. March marks the ninth month of Fiscal Year 2019 and the end of the third quarter of the state fiscal year.
“General Fund collections in the areas of personal income tax and insurance premium tax were above consensus expectations,” noted Secretary Young. “These were the same two sources that under-performed in February, suggesting the February misses were due to timing issues with the short month that ended on a weekend.” Corporate income tax collections were on target for the month and performed better than consensus expectations for the year-to-date.
“As always, collection and refunding activity in April will be an important indicator of yearly personal income tax results,” stated Young. “Refund volume and timing, however, will continue to be a factor as the processing of returns continues through the last quarter of FY19.”
The Transportation Fund collected $22.32 million for the month of March, or -$2.19 million below target. Year-to-date, fiscal 2019 Transportation Fund revenues were -$1.81 million, or -0.89%, below target. Every line item in Transportation was below targets.
The Education Fund collected $39.30 million for the month, or $0.23 million above target. Year-to-date, fiscal 2019 Education Fund revenues are -$1.66 million, or -0.42%, below target. Secretary Young noted that the year-to-date shortfall in the Education Fund continues to decline, given the positive performance in both February and March.
On a year-over-year basis, after adjusting for legislative changes noted below, the three funds in aggregate continue to reflect solid gains in a broad range of tax categories. Adjusting for these changes, for comparison purposes only, the year-to-date fiscal 2019 revenues represent increases of 5.13%, 0.81%, and 4.47% for the General Fund, Transportation Fund, and Education Fund, respectively, from the corresponding first nine months of fiscal 2018.
Note: Act 11 of 2018 made several key changes to existing State revenue and expenditure distributions effective July 1 and implemented in the current fiscal year. The most significant changes were the shift of the entirety of the Sales and Use tax and 25% of the Meals and Rooms tax from the General Fund to the Education Fund, offset by the elimination of a lump sum annual transfer of General Fund dollars to the Education Fund.