Vermont’s revenue results for April reflect the revenue impact of global COVID-19 pandemic. Collections in all three major revenue sources – General Fund, Transportation Fund, and Education Fund – were significantly lower than their respective monthly targets.
Vermont Business Magazine April tax revenues were predictably and dramatically below the consensus forecast for the month. April is the first full month of revenue collections since a State of Emergency was declared by Governor Scott on March 13, 2020, and the subsequent mitigation “Stay Home Stay Safe” Order was issued on March 24, 2020, to slow and suppress the spread of COVID-19.
General Fund revenues collected for the month totaled $106.54 million, or -$140.90 million (-56.94%) below their monthly target. In particular, the largest factor in the underperformance was the extension of the federal and state filing deadlines for personal income taxes from April 15 to July 15, 2020.
April is typically the largest collections month of the year.
The Tax Department reports that 39,000 fewer tax returns were filed in April 2020 compared to April 2019.
All major General Fund revenue sources performed below their expectations for the month.
Additionally, the deferrals granted for COVID-19 impacted taxpayers in the bar, restaurant, lodging and retail businesses are reflected in Meals And Rooms Tax collected, which are down -$6.8 million versus April expectations in the General Fund and -$2.4 million in the Education Fund.
Sales and Use Tax collections were $5.1 million below the April consensus expectations for the Education Fund as well.
“These results are not unexpected in light of the extension of filing deadlines and deferral of payments,” said Agency of Administration Secretary Young. “A recent risk assessment by the state and legislative economists projected that of the $191 million of taxes deferred from the general fund in fiscal 2020, $143 million will ultimately be collected in the next fiscal year, while $48 million may be lost permanently.
“That estimate did not take into account the most recent actions taken by the governor to re-open certain sectors of the economy in the coming weeks and months. If recent steps announced are implemented successfully by not increasing public health concerns, then that assessment will likely change and May revenues could improve compared to April.”
Year-to-date, General Fund revenues are -$100.59 million (-7.41%) below their target. Secretary Young noted: “The State was very fortunate to have experienced strong fiscal performance prior to the COVID-19 pandemic and entered this period with healthy reserves and a predicted surplus, factors that will help lessen the blow dealt by this national emergency.”
The Transportation Fund was -$5.89 million, or -23.58%, below its target for the month, bringing in $19.11 million. Year-to-date, Transportation Fund revenues are -$7.44 million (-3.26%) below expectations. In particular, motor vehicle purchase and use tax revenues and motor vehicle fee revenues per-formed below expectations.
The Education Fund was -$10.09 million, or -20.97%, below its monthly target, having collected $38.01 million for the month and was -$11.23 million, or -2.41%, below year-to–date expectations. All state-wide revenue sources attributed to this fund performed below 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 April 2020 represent changes of -7.98%, -2.51%, and +3.49% for the General Fund, Transportation Fund, and Education Fund, respectively, from the same period in FY 2019.
