Vermont Business Magazine General Fund tax revenues fell below expectations for February and are now behind targets for the fiscal year. The vital personal income tax, after a strong January, was off by -11.25 percent, or -$3.02 million. A whopping increase in the corporate tax was undermined by a poor month in the insurance premium tax. February marks the eighth month of Fiscal Year 2019.
General Fund tax revenues collected for the month totaled $68.29 million, or -5.94% below the monthly consensus revenue target. Year-to-date, fiscal year 2019 General Fund revenues are -$3.04 million, or -0.38%, below expectations.
A bright spot in February tax revenues is the sales tax, which now goes solely to the Education Fund. The sales tax, the second most important revenue source, was up +5.48 percent over targets (+$1.69 million).
“General Fund collections under-performed in the areas of personal income tax and insurance premium tax, but collections were higher than forecast in corporate income tax,” noted Secretary Young. “Particularly regarding the insurance premium tax, it appears the under-performance is attributable to the timing of receipts between February and March. Across most revenue sources – and across the three major funds – February performance was very close to expectations.”
The Transportation Fund collected $18.57 million for the month of February, or $0.17 million above target. Year-to-date, fiscal 2019 Transportation Fund revenues were $0.38 million, or 0.21%, above target.
The Education Fund collected $40.43 million for the month, or $0.96 million above target. Year-to-date, fiscal 2019 Education Fund revenues are -$1.89 million, or -0.53%, below target. Secretary Young noted that the year-to-date shortfall in the Education Fund at the end of January has been reduced given the positive performance this month.
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 4.63%, 1.57%, and 4.40% for the General Fund, Transportation Fund, and Education Fund, respectively, from the corresponding first eight 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.
Source: Administration. 3.15.2019