by Timothy McQuiston, Vermont Business Magazine A surprisingly strong General Fund revenue report will not stave off the impending economic and tax impacts of COVID-19 and the mitigation measures the state has imposed on businesses and workers. The corporate (+34.9 million) and personal income (+$6.5 million) taxes pushed the GF nearly $38 million ahead of projections and over $40 million for the fiscal year, despite losses in other areas.
Meanwhile, the consumer revenue sources predictably started to show the impact of the mitigation measures, which were implemented halfway throughout the month.
The usually reliable rooms and meals tax was down over 30 percent from its targets and the gasoline tax was down over 34 percent.
The State of Emergency, declared by Governor Scott on March 13, 2020, and the subsequent mitigation measures to slow and suppress the spread of COVID-19, were implemented throughout the second half of March and into April.
Revenue collections for the month of March 2020 were reported by the Administration secretary today. She is warning of significant losses in state revenues as we enter the last quarter of the fiscal year, which ends June 30.
“Revenues over the next, and last, three months of FY20 will be heavily impacted by the critical mitigation steps taken by Vermont, other states and the federal government, including the closing of restaurants and bars, “stay home, stay safe” orders, and the extension of income tax filing deadlines into July of next fiscal year,” Administration Secretary Susanne Young said. “How significant will not be clear for the immediate term, as the lifting of “stay home, stay safe” restrictions is dependent on our success in suppressing the spread of this highly contagious virus.”
On Friday, Governor Scott issued Addendum 10 to Executive Order 01-20, designed to start getting more Vermonters back to work.
The addendum outlined a measured, phased approach to restart the economy that balanced the need to improve overall social and economic wellbeing with the need to prevent a resurgence of COVID-19 outbreaks.
The order instituted new health and safety requirements and encouraged the public to wear cloth face coverings.
The success of the phased restart will depend on the ability of employers and employees to adhere to health and safety measures essential to limiting the spread of COVID-19.
The impact of the Paycheck Protection Program also is unknown, as businesses are just starting to get the job protection money from the federal government now.
The US SBA has approved more than $853 million in loans to 4,896 Vermont businesses. That money should help workers get off unemployment and contribute in a greater way to the tax revenue stream.
“These measures had some impact on March revenues,” reported Young. “The Transportation and Education Fund revenues fell below expectations, while the General Fund receipts exceeded their monthly target. Reduced collections of consumer taxes, such as rooms and meal, gasoline, and sales and use taxes materialized as expected in the March receipts,” continued Secretary Young.
General Fund revenues collected for the month totaled $145.93 million, or +$37.91 million (+35.1%) above the monthly consensus revenue target, largely due to stronger than expected personal income and corporate tax receipts in March which will likely not be replicated in the near future.
Year-to-date, the General Fund revenues were +40.31 million, or +3.63%, above their target of $1,110.78 million.
The Transportation Fund was -$3.24 million, or -13.27%, below its target for the month, bringing in $24.43 million. Year-to-date, Transportation Fund revenues are -$1.54 million, or -0.76%, below expectations.
The Education Fund was -$1.49 million, or -3.66%, below its monthly target, having collected $40.63 million for the month and was -$1.14 million, or -0.27%, below year-to–date expectations.
Note: Adjusting for redirection of certain healthcare-related taxes under Act 6 of 2019 and redistribution of the meals and rooms tax under Act 76 of 2019, for comparison purposes only, in the accompanying General Fund tables, the year-to-date revenues for January 2020 represent changes of +1.86%, +0.86%, and +6.42% for the General Fund, Transportation Fund, and Education Fund, respectively, from the same period in FY 2019.
