Vermont Business Magazine The state reported today that tax revenue collections for the month of February 2020 are still on track for the fiscal year. Administration Secretary Susanne Young acknowledged that the March results will give them a much better understanding of the COVID-19 impact. However, for February the General Fund was below its target as the personal income tax, the most important revenue source, was nearly 6 percent short.
Meanwhile the Transportation and Education Funds were above their respective targets.
“General Fund receipts were below their monthly target for February while the Transportation and Education Fund revenues were above expectations,” stated Secretary Young.
General Fund revenues collected for the month totaled $85.19 million, or -1.78 million (-2.05%) below the monthly consensus revenue target, which has been updated to reflect the annual consensus revenue forecast adopted by the Emergency Board on January 16, 2020.
For the year-to-date, the General Fund revenues are +2.39 million, or +0.24%, above their target. Secretary Young noted that personal income tax and insurance premium revenues performed below their monthly target in February, while corporate income tax exceeded its target.
The Transportation Fund was +$0.88 million, or +4.79%, above expectations for the month, bringing in $19.32 million. For the year-to-date, Transportation Fund revenues are $1.70 million, or +0.95%, above their target.
The Transportation Fund has struggled in recent years, but even the gasoline tax was ahead of targets. Again, March will bring a better idea because of Governor Phil Scott’s “Stay, Home, Stay Safe” order and because gas prices have fallen steeply with demand diminished and supply high because of disputes between Saudi Arabia and Russia.
The Education Fund was +$0.51 million, or +1.24%, above its monthly target, having collected $41.66 million for the month. For the year-to-date, Education Fund revenues are +0.34 million, or +0.09%, above their target.
The Rooms & Meals tax, which has bolstered the revenue scene for many years and is the third most important source, also faces a severe challenge with the ski resorts closing by mid-March and all restaurants closed except for takeout.
The R&M supports the General Fund, the Education Fund and the clean water fund. Also in recent years the ski resorts have seen many visitors through March and into April.
Secretary Young stated, “Through February 29, all three major state funds remained on track relative to their monthly targets. Revenues over the next four months of FY20 will be impacted as the critical mitigation steps taken by the State of Vermont and other states to slow the spread of COVID-19 and the strengthening of the healthcare system’s capacity to meet the challenges of the pandemic are fully implemented.”
March revenues will be the first indication of the impact of the fluid and changing developments on the state’s revenues, she said.
“The State is entering this uncertain period from a position of strength,” continued Young. “due to a healthy cash-on-hand balance, full reserves, and an unemployment insurance fund that was the healthiest in the nation. Future performance will be monitored closely, as will the details of the federal funding available in the ‘Coronavirus Aid, Relief, and Economic Security Act’ headed to final passage by Congress this week.”
As for the state budget, VPR reported that State Finance and Management Commissioner Adam Greshin, who testified before the Senate Finance Appropriations Committee Thursday, said while the shortfall for the current fiscal year will be $224 million, he anticipates that the actual will be only about $62 million. The larger figure, he said, was because of required tax payments being deferred until July 15. The fiscal year ends June 30.
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.
